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ESSAYS  IN  FINANCE. 


jfir 


BY 


ROBEET    GIFFEN. 


SECOND    SERIES. 


NEW  YOEK : 

G.   P.   PUTNAM'S   SONS, 

27  AND  29,  WEST  TWENTY-THIRD  STREET. 

18S«, 


CONTENTS 


\8S(> 


I'AGK 

TRADE    DEPRESSION    AND    LOW    PRICES  ...  -  1 

1.-  Introductory.— 2.  The  Present  Couditions.— 8.  The  His- 
tory of  Prices.— 4.  The  Question  of  Gold  Scarcity.— 
5.  Conclusions. 

II. 

GOLD    SUPPLY  ;     THE    RATE    OF   DISCOUNT,    AND    PRICES  .       37 

1.  The  Connectiou  Explained.— 2.  Statistical  Illustrations. 
—3.  The  Eecent  Gold  Contraction.— 4.  Summary  and 
Conclusions. 


III. 

THE  EFFECTS  ON  TRADE  OF  THE  SUPPLY  OF  COINAGE 


89 


IV. 


BANK   RESERVES 


105 


V. 


THE    FOREIGN    TRADE    OF   THE    UNITED    STATES 


116 


THE   USE    OF   IMPORT   AND   EXPORT   STATISTICS       . 

1.  Introductory 

2.  General  Eemarks  on  Import  and  Export  Figures     . 

3.  Balance  of  Trade  and  Balance  of  Indebtedness.     The 

Generality  of  the  Excess  of  Imports    . 

4.  Siibject  continued :  How  the  Excess  of  Imports  into  the 

United  Kingdom  is  to  be  accounted  for 

a  2 


132 

132 
136 

161 

171 


85S137 


IV  CONTENTS. 

I'AGt 

5.  Sulijcct  continued  :  The  Excess  of  Imports  or  Exports  in 

France  and  the  United  States.     Conclusion  .         .     1% 

G.  Import  and  Export  Statistics  and  the  Protectionist  Con- 
troversy .........     11)9 

7.  Subject  continued:    The  negative  use  of   Import  and 

Export  Statistics 'JUG 

S.  Subject  continued :    Other  uses  of  Import  and  Export 

Statistics.    Conclusion      ......     228 


YII. 

FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE  .     .     .  240 

1.  Introductory. — 2.  England's  Ivelative  Prosperity. — 3.  Our 
Si)ccial  Gain  from  Foreign  Manufacturing. — 4.  Summary 
and  Conclusions. 

VIII. 

THE    UTILITY    OF    COMMON    STATISTICS 275 

IX. 

SOME   GENEltAL   USES   OF   STATISTICAL   KNOWLEDGE        .  .    ol8 

X. 

THE    PROGRESS    OF    THE    WORKING    GLASSES    IN    THE     LAST 

HALF-CENTURY 365 

XI. 

FURTHER     NOTES     ON     THE     PROGRESS     OF     THE      WORKING 

CLASSES 409 

1.  The  Eeasons  for  a  Fifty  Years'  Comparison     .         .         .  410 

2.  The  Rise  in  Money  Wages 4L5 

3.  The  Position  Fifty  Years  ago 438 

4.  The  Working  Class  Consumption  of  Me.tt  Fifty  Years  ago  441) 
C.  Aggi-egate  Income  and  Classification  Fifty  Years  ago  and 

now 457 

G.  Smnniury  and  Conclusion 4Gy 


PREFACE. 


Lv  iiuikliig  a  collection  of  Essays  for  a  second  series 
of  "'  Essays  in  Finance  "  I  have  endeavoured  to  keep 
in  view  the  object  whicli  I  stated  in  the  Preface  to 
tlie  former  volume,  viz.,  the  selection  of  such  Essays 
as  contain  discussions  of  topics  of  permanent  interest, 
apart  from  the  occasions  which  suggested  the  Essays 
themselves.  It  appears  to  be  unnecessary,  therefore, 
tempting  as  the  opportunity  may  seem,  to  reopen  in 
a  Preface  some  of  the  discussions  in  the  volume,  and 
refer  to  the  additional  light  thrown  upon  them  by 
subsequent  experience.  This  has  been  done  in 
occasional  notes  scattered  throughout  the  volume, 
but  substantially  such  of  the  Essays  as  are  reprints 
appear  as  originally  published. 

An  attempt  has  been  made,  as  far  as  possible,  to 
keep  together  Essays  bearing  on  connected  topics, 
and  subject  to  this  they  are  mostly  arranged  in  the 
order  of  the  date  of  writing.  I  have  taken  care,  as 
a  rule,  to  notice  this  date  in  some  part  of  each  Essay, 
and  in  addition,  where  it  seemed  necessary,  I  have 


VI  PllEFACE. 

added  the  year  of  writing  in  parenthesis  at  the  end 
of"  each  Essay. 

The  second  Essay  is  entirely  new,  and  the  hist, 
which  was  a  paper  read  Ijefore  the  Statistical  Society, 
lias  not  beeu  published  before,  although  partial 
reports  of  it  appeared  in  the  press  at  the  time  it  was 
read.  The  other  Essays  are  reprints,  but  several  were 
published  anonymously,  and  all  of  them  are  more  or 
less  inaccessible.  From  my  own  point  of  view  1 
have  been  desirous  to  collect  them,  as  one  Essay  often 
supplements  another,  and  in  several  of  them  discus- 
sions are  continued  wdiich  I  commenced  as  long  ago 
as  1872,  and  have  resumed  from  time  to  time  since, 
as  will  be  seen  by  reference  to  my  former  "Essays 
in  Finance  "  and  to  the  earlier  Essays  of  the  present 
volume. 

E.  aiFFEN. 

Kexsington, 

Fcbruari/,  188G, 


ESSAYS    IN    FINANCE, 


I. 

TRADE  DEPRESSION  AND  LOW  PRICES. 

In  venturing  to  discuss  tlie  subject  of  the  present  depression 
of  trade  in  special  connection  with  prices,  I  feel  that  I  may- 
be taking  an  unfair  advantage  of  some  readers.  What  will 
interest  them  is  the  present  depression — its  causes  and 
nature,  and  possible  remedies ;  not  what  may  appear  to  them 
side  issues,  however  interesting  on  philosophical  grounds. 
But  the  question  of  prices,  I  confess,  is  the  interesting  topic 
to  my  own  mind.  In  the  whole  range  of  statistical  know- 
ledge there  are  few  subjects  of  deeper  interest.  The  right 
appreciation  of  economic  history  is  impossible  without  an 
adequate  study  of  the  course  of  prices,  and  they  often  explain 
many  more  things  than  the  trade  depression  and  prosperity, 
which  are  among  the  causes  and  effects  of  changes  in  prices 
themselves.  Notwithstanding  tliis  difference  in  the  point  of 
view,  my  hope  is  that  those  who  wish  to  study  the  question 
of  trade  depression  in  and  for  itself  will  not  lose,  but  gain, 
by  approaching  it  from  a  standpoint  different  from  their 
own.  The  scientific  treatment  of  a  question  which  is  often 
discussed  with  heat  and  passion  can  hardly  be  without  its 
uses. 

II.  B 


TRADE   DEPRESSION   AND   LOW    PRICES. 


I. — INTRO  D  UCTOR  Y. 

To  clear  the  groimd  for  debate,  a  few  preliminary  remarks 
seem  desirable.  First  of  all — what  do  we  mean  by  trade 
depression  ?  To  hear  some  talk,  one  would  think  that, 
whenever  trade  depression  is  spoken  of,  the  question  is 
whether  or  not  the  whole  industry  of  the  country  is  being- 
ruined.  But  there  may  be  trade  depressions  which  mean  no 
such  thing,  and,  in  fact,  of  the  numerous  depressions  which 
one  remembers,  or  has  read  of,  few  have  had  that  character. 
They  liave  been  merely  passing  phenomena,  having  many 
features  in  common,  and  having  nothing  so  certain  about 
them  as  that  they  must  be  passing,  although  it  is  the 
characteristic  of  the  depressed  talk  of  each  period  that 
recovery  is  treated  as  hopeless.  In  fact,  they  may  arise 
entirely  from  a  very  moderate  change,  as  compared  with  a 
period  of  prosperity,  in  the  amount  of  employment  for  labour 
and  capital.  Thus,  to  take  years  like  1867  and  1868,  wliicli 
were  years  of  undoubted  depression,  wdien  men's  hearts  were 
failing  them  for  fear  of  what  the  consequences  of  the  great 
panic  of  1866  might  be,  we  find  that  the  home  production  of 
coal  was  in  round  figures  about  104,000,000  tons  per  annum, 
wdiereas  in  1864  and  1865,  only  three  years  before,  which 
were  years  of  great  prosperity,  the  production  was  on  the 
average  about  95,000,000  tons  only.  The  production  of  pig 
iron,  again,  which  averaged  4,800,000  tons  in  1864-5,  was 
rather  more  than  that  figure  in  1867  and  1868.  The  traffic 
receipts  of  the  railways  likewise  increased  greatly  in  those 
years  of  depression  as  compared  with  the  years  of  prosperity 
just  preceding.  Foreign  trade  increased  largely  at  the  same 
time.  Pauperism,  which  had  diminished  by  about  8  per 
cent,  in  18G6  as  compared  with  1864,  rose  once  more  in  1868 


TRADE    DEPRESSION   AND   LOW   PRICES,  3 

to  the  former  level,  but  not  beyond.  I  recollect  no  period, 
however,  when  trade  was  spoken  of  in  more  desponding 
terms  than  it  was  in  1867  and  18G8.  Precursors  of  our 
Pair  Trade  friends,  in  the  shape  of  revivers  of  British 
industry  and  rcciprocitarians,  began  to  make  their  appear- 
ance ;  the  City  was  dull,  as  every  one  said,  beyond  all 
previous  experience,  with  money  at  2  per  cent,  for  an 
unprecedented  time ;  a  remarkable  article  appeared  in  the 
Edinhurgh  Rcviciv,  discussing  the  strike  of  capital ;  no 
symptom  was  wanting  to  what  is  called  a  marked  period  of 
depression.  "  Depression,"  therefore,  may  exist  when  almost 
all  the  statistical  signs  point  the  other  way  ;  when  production 
and  consumption  are  on  a  large  scale  and  there  is  real 
prosperity,  although  without  the  glow  of  a  period  of  inflation. 
It  is  a  not  uncommon  saying  in  the  City  that  business  iy 
never  so  really  sound  and  good  as  when  prices  are  low, 
imports  and  exports  declining,  and  everybody  more  or  less 
depressed.  I  should  not  adopt  this  saying  without  qualifi- 
cation. AU  I  am  concerned  to  show  is  that  the  question  of 
the  real  meaning  of  trade  depression  is  most  essential  to  the 
discussion.  The  depressions  of  which  there  has  been 
experience  in  past  times  have  been  mostly  transitory  affairs, 
implying  a  very  small  reduction  from  the  previous  maximum 
of  employment  for  labour  and  capital.  The  presumption  is 
that,  unless  special  reasons  can  l)e  shown  to  the  contrary, 
any  new  depression  is  of  the  same  character. 

Again,  there  is  surely  something  very  innocent  in  the  oft 
put  question — Why  is  trade  depressed?  Should  not  the 
question  rather  be — Why  is  trade  ever  prosperous?  To 
keep  in  full  employment  the  complicated  machinery  of  a 
highly  organized  industrial  community  like  that  of  England  ; 
to  have  matters  so  ordered  that  at  a  given  time  there  is  an 
excessive  demand  for  labour  and  capital  in  all  branches  of 

B  2 


4  TRADE    DEPRESSION    AND   LOW   PRICES. 

industry,  and  hardly  any  indivithial  willing  to  work  in  fact 
goes  ^^•ithout  employment ;  and  to  have  all  this  accomplished 
by  voluntary  association  and  competition  among  the  units  of 
which  society  is  composed,  each  pursuing  his  own  interest, 
and  labouring  to  produce  what  he  believes  other  people  will 
buy,  is  surely  a  miracle  so  astounding  as  to  excite  perpetual 
surprise  that  it  should  ever  be  performed.  The  marvel  is 
not  at  all  diminished  by  the  fact  that  imder  no  other 
conceivable  system,  socialist  or  other,  could  the  same  results 
be  achieved.  But  if  such  results  are  a  marvel,  then  it  is  no 
marvel,  but  rather  the  reverse,  that  at  times  the  industrial 
machine  should  work  rather  less  successfully,  that  there 
should  be  a  hitch  in  the  arrangements  somewhere,  and 
consequently  a  small  margin  of  unemployed  labour  and 
capital  resulting  in  what  is  known  as  a  depression  of  trade. 
In  a  less  complicated  industrial  community  there  is  no 
mystery  in  depression  when  it  comes.  An  agricultural 
community  reaps  a  bad  harvest,  and  it  is  depressed.  In* 
days  when  communication  was  bad,  and  the  margins  of  all 
industrial  communities  were  smaller  than  in  modern  tunes, 
the  people  starved  and  died.  Only  forty  years  ago,  in 
Ireland,  there  was  a  bad  harvest  and  resulting  famine  of  the 
ancient  type.  A  fishing  community,  again,  is  elated  or 
depressed  by  the  accidents  or  obscure  causes  which  guide 
the  movements  of  fish,  and  which  give  the  fishermen  an 
overflowing  harvest  one  year  and  almost  no  harvest  the  next. 
The  explanation  of  depression  in  such  cases  is  as  simple  as  it 
can  be.  In  more  highly  organized  communities  industry 
appears  to  be  steadier — and  is  really  steadier,  in  all  proba- 
bility, being  less  dependent  on  any  one  cause  than  in 
communities  of  a  lower  type ; — but  the  fact  of  greater 
steadiness  should  not  blind  us  to  the  consideration  that 
even  in  such  communities  the  failure  of  harvests  and  other 


TRADE    DEPRESSION   AND    LOW    PliTCES.  0 

causes  must  have  their  clfects.  Nethhi,!^  can  mark  more 
forcibly  the  progress  of  modern  communities' than  tlie  uutcry 
about  depression  which  arises  when  the  slightest  decline 
from  a  maximum  period  occurs.  The  variations  which  were 
formerly  from  abundance  to  famine,  affecting  almost  the 
entire  community,  are  now  limited  to  a  small  percentage  of 
the  total  production,  so  that  prosperity  and  adversity, 
according  to  the  statistical  evidence,  are  hardly  distinguish- 
able, and  good  business  authorities  maintain  that  the  times 
when  people  complain  most  are  the  times  that  are  really  the 
best. 

A  third  remark  I  have  to  make  at  the  outset  is  that  as 

trade  dcipression  may  arise  from  very  small  changes  in  the 

total  amount  of  production,  while  industrial  organization  is 

of  such  a  nature  that  such  changes  need  cause  no  surprise,  it 

becomes   equally  no   matter   for   surprise   that   changes  in 

prices  have  so  intimate  a  connection  witli  the  subject.     Tlie 

■  feeling    of  depression,   judged   by   the    realities   of  things, 

frequently  appears  to  be  either  wholly  unaccountable  or  to 

go  far  beyond  what  the  facts  warrant.     And  the  explanation 

would  seem  to  be  that  as  there  is  a  general  rise  of  prices  in 

prosperous  times,  and  prices  remain  then  at  a  high  level,  so 

in  times  of  "  depression,"  when  production  and  consumption 

and  saving  are  diminished  by  a  small  percentage,  as  compared 

with  what  they  are  at  other  times,  there  is  often  a  general 

fall  of  prices,  and  it  is  this  fall  of  prices  which  produces 

much  of  the  gloom.     Merchants  and  capitalists  are  hit  by  it. 

At  their  stock-takings,  with  the  same  quantities  of  goods,  or 

even  with  greater  quantities,  their  nominal  capital  appears 

reduced.     In  falling  markets  their  operations  result  steadily 

in  loss  for  a  considerable  period.    Many  who  have  conducted 

operations  with  borrowed  money  are  cleaned  out,  and  tail. 

The  community  nerd  lie  none  the  poorer.     The  goods  them- 


6  TRADE    DEPRESSION    AND    LOW   PRICES. 

selves  are  not  destroyed.  Somebody  gets  the  benefit  of  the 
lower  prices.  But  the  leaders  of  industrial  enterprise,  those 
who  run  the  machine,  are  all  poorer,  and  feel  even  poorer 
than  they  really  are,  as  they  are  accustomed  to  look  mainly 
at  nominal  values,  and  not  at  the  quantities  of  the  things 
themselves  which  they  possess.  The  moral  is  that  economists 
and  public  men  should  beware  to  some  extent  of  the  outcry 
from  the  market-place.  ]\Ierchants  and  capitalists  are  not 
the  whole  community.  Their  interest  in  the  long  run  is  the 
same  as  that  of  all.  Xo  community  can  prosper  steadily 
with  its  mercantile  classes  depressed.  But  the  immediate 
interest  of  particular  classes  is  often  different  from  that  of 
the  community  generally,  and  in  this  way  it  is  not  surprising 
that  the  gloom  of  the  market-place  in  times  of  depression 
should  appear  altogether  excessive  in  relation  to  the  real 
circumstances  of  the  community  as  a  whole.  Apart  from 
exaggeration,  which  is  also  a  factor  to  be  reckoned  with, 
the  particular  classes  who  cry  out  most  from  time  to  time 
about  depression  may  suffer  specially  from  evils  which 
injuriously  affect  the  community  as  a  whole  very  little,  or 
may  even  affect  it  momentarily  for  good. 


II.— THE  PRESENT  CONDITIONS. 

We  come  then  to  the  facts  of  the  existing  depression,  which 
appears  to  date  from  about  the  end  of  1882  or  beginning  of 
1883.  Just  before  that  date  there  had  certainly  been  a 
period  of  fair  prosperity  and  rising  prices,  though  a  compara- 
tively short  one.  In  1879  a  period  of  depression  which  had 
been  more  or  less  marked  since  1873  all  at  once  came  to  an 
end.     Tliere  was  a  general  "  boom  "  in  the  produce  markets 


TRADE    DEPRESSION   AND    LOW    PRICES.  7 

and  a  recovery  of  tone  in  business  whicli  continued  for  two 
or  three  years.  The  total  value  of  imports  and  exports, 
which  had  fallen  from  682  millions  sterling  in  1873  to  G12 
millions  in  1S79,  almost  altogether  owing  to  the  fall  of  prices, 
rose  in  1880  to  G97  millions,  and  in  1883  to  732  millions — 
the  foreign  trade  of  the  latter  year,  measured  by  quantities, 
being  the  largest  on  record.  The  entries  and  clearances  of 
shipping  in  the  foreign  trade,  which  had  been  stationary  at 
about  50  million  tons  for  several  years  before  1879,  though 
there  was  a  sensible  increase  as  compared  with  1873  (thus 
showing,  by-the-way,  that  the  apparent  falling  off  in  the 
foreign  trade  between  those  two  years  was  exclusively  in 
nominal  values),  also  increased  very  rapidly  after  1879.  In 
1880  the  total  was  about  59  million  tons,  and  in  1883  it  was 
65  million  tons.  The  receipts  from  railway  goods  traffic, 
again,  which  had  been  stationary  for  several  years  before 
1879  at  about  33^  millions  sterling,  rose  to  nearly  3G 
millions  in  1880,  and  nearly  39  millions  in  1883.  The  pro- 
duction of  pig  iron,  which  had  ranged  between  six  and  seven 
million  tons  for  several  years  before  1879,  and  was  in  1879 
at  the  lowest  figure,  rose  in  1880  to  nearly  eight  million  tons, 
and  in  1882  to  8,600,000  tons.  Similarly,  the  jjroduction  of 
coal  rose  from  134  million  tons  in  1879  to  147  million  tons 
in  1880  and  156  million  tons  in  1882.  Pauperism  exception- 
ally increased  in  1880  as  compared  with  1879,  it  being  not 
unusual  for  the  results  of  good  trade  in  diminishing  pauperism 
and  increasing  general  consumption  not  to  tell  all  at  once,  but 
the  increase  was  very  slight,  and  in  the  following  years  tliere 
was  a  moderate  diminution.  The  consumption  per  head  of 
tea  and  sugar,  though  not  of  spirits,  also  increased  rapidly 
after  1879,  as  compared  with  the  years  just  before  that  date. 
But  at  the  end  of  1882  or  beginning  of  1883  the  aspect  of 
affairs  changed.     Prices  began  to  fall ;  product itui  and  foreign 


8  TRADE    DEPRESSION   AND    LOW    PRICES. 

trade  fell  off;  since  the  present  year  (1885)  began  pauperism 
also  shows  a  tendency  to  increase.  It  is  since  1883  that  we 
have  had  a  steady  outcry  from  the  market-place  about  depres- 
sion which  has  been  echoed  and  re-echoed  in  political  circles 
in  a  somewhat  unintelligent  manner,  with  more  than  usual 
emphasis  laid  on  the  assumptions,  so  common  at  such  times, 
that  depression  is  itself  an  uncommon  and  bewildering 
phenomenon,  instead  of  being  the  most  natural  thing  in  the 
world,  and  that  the  present  depression  is  the  worst  on  record, 
and  the  beginning  of  the  end  of  English  industrial  greatness. 
In  spite  of  these  assumptions,  it  cannot  really  be  disputed, 
when  we  come  to  look  into  the  facts,  that  the  present  de- 
pression is  in  no  way  distinguished  from  many  which  have 
gone  before  by  any  exceptional  severity.  The  gloom  may  be 
greater,  for  reasons  to  be  afterwards  discussed,  though  this  is 
doubtful ;  but  the  actual  diminution  of  employment  for  labour 
and  capital,  as  far  as  matters  have  yet  gone,  is  no  greater  as 
compared  with  the  previous  maximum  than  has  often  been 
experienced.  Thus,  in  the  foreign  trade,  imports  and  exports 
have  fallen  from  732  millions  in  1883  to  686  millions  in 
1884 — a  reduction  of  about  6  per  cent.  An  additional  falling 
off  is  in  progress  in  the  current  year;  l)ut,  allowing  for  the 
fall  of  prices,  the  reduction  in  business  done  appears  to  be 
quite  inconsiderable.  The  entries  and  clearances  of  shipping 
in  1884  only  fell  off  by  a  fractional  amount  as  compared  with 
the  high  maxinmm  of  1883  ;  and  in  the  current  year,  as  far' 
as  it  has  gone,  the  figures  of  1884  are  fairly  well  maintained. 
The  goods  traffic  of  our  leading  railways  again  fell  off  in 
1884  aljout  li  per  cent,  as  compared  with  1883.  In  tlie 
present  year  there  is  an  additional  falling  off;  but  the  varia- 
tion is  still  only  by  a  small  percentage,  and  is  partly  the 
result  of  a  reduction  of  rates,  and  not  wholly  a  reduction  of 
business   done.     Allowing  for   some  signs  of   improvement 


TRADE   DEPRESSION    AND    LOW    TRICES.  if 

wliicli    arc.    now   ai)i)aii'iit,   it    SL'cms    not    uiilikfly   tliat   the 
fallin<,'  off  to  be  recorded  for   the  whole  year  will  Le  very 
small  indeed.     The  produeticni  of  pig  iron,  again,  which  was 
still  at  its  maximnni  in  1883,  or  about  S\  million  tons,  only 
shows  a  falling  ofl'  in  1884,  according  to  the  best  estimates 
published,  to  about  7|  million  tons,  as  high  a  figure  as  in 
1880,  which  was  a  year  of  considerable  prosperity,  and  very 
much  higher  thau  in  the  inflated  years  of  1872  and  1873. 
As  regards  the  production  of  coal,  there  are  yet  no  official 
figures,  but  it  seems  doubtful  whether  there  has  been  more 
than  the  slightest  falling  off.    The  consumption  of  raw  cotton, 
which  was  at  a  very  high  point  in  1883,  has  also  remained  at 
that  level;  while  the  consumption  of  wool  in  1884  was  aljout 
as  high  as  in  any  year  on  record,  if  not  considerably  higher. 
The  consumption  of  copper,  lead,  and  other  metals,  as  well  as 
of  the  raw  materials,  of  manufactures  generally,  also  remained 
at  a  high  point  in  1884,  and  still  remains  large.    The  consump- 
tion of  sugar  and  tea  was  likewise  even  larger  in  1884  than  it 
had  been  in  the  maximum  year,  1883.     So  far  as  the  real 
facts  go,  therefore,  there  is  nothing  to  indicate  a  considerable 
diminution  in  the  employment  for  capital  and  labour  during 
the  present    depression.     Exceptionally  in  the  shipbuilding 
trade,  production  has  greatly  declined  as  compared  with  the 
previous  maximum.     The  ships  built  in  1884*  were  about 
600,000  tons  only  as  compared  with  769,000  tons  the  previous 
year.     It  seems   doubtful  whether  in  the  current  year  the 
figures  of  1884  will  be  maintained.     But  the  maxinmm  from 
which   this   decline   takes   place   was   itself  unprecedented, 
while  shipbuilding  has  long  been  a  variable  trade.     Large  as 
the  variation   is,  moreover,  and   large  as   the   shipbuilding 
industry  itself  is,  it  remains  true  that  the  variation  for  the 


*  Exchisive  of  ships  built  for  foreigners. 


10  TRADE   DEPRESSION    AND    LOW   PRICES. 

worse  at  the  present  time  in  the  aggregate  industry  of  the 
country,  of  which  shipbuilding,  large  as  it  is,  is  really  only  a 
small  part,  is  singularly  small.  As  far  as  ordinary  tests  go, 
we  must  still  speak,  even  in  these  times  of  depression,  of  the 
great  prosperity  of  the  people  of  the  United  Kingdom.  Seeds 
of  decay  may  have  been  sown  which  will  ripen  in  time.  The 
prophets  of  approaching  ruin  may  be  right  in  pointing  to 
this  and  that  symptom  as  alarming.  But  the  industrial 
machine,  as  yet,  seems  all  but  fully  employed,  with  the  result 
that  production,  consumption,  and  sa\'ing  are  all  on  a  large 
scale.  The  depression,  like  other  depressions  in  past  times, 
keeps  within  narrow  limits. 

But  while  the  facts  stated  are  beyond  dispute,  the  fact 
of  rather  more  outcry  being  made  than  usual  remains  to  be 
accounted  for  and  explained.  The  explanation  I  have  to 
suggest  is  the  condition  of  prices  for  many  years  past.  But 
for  the  facts  as  to  prices  which  have  to  be  noticed,  I  should 
be  disposed  to  say  that  the  present  depression  would  perhaps 
hardly  be  noticed  at  all  as  a  depression.  Comparing  it  with 
former  periods,  it  is  easy  to  see  that  it  possesses  no  very 
marked  feature.  Usually  a  great  depression  succeeds  a  great 
period  of  inflation.  In  1867  and  1868  the  country  was 
liquidating  a  great  deal  of  bad  finance  in  connection  with  the 
formation  of  limited  companies  and  the  construction  of  con- 
tractors' railways.  From  1873  to  1879,  though  the  depression 
of  that  period  was  aggravated  by  other  causes,  there  was  a 
similar  liquidation  of  the  bad  finance  of  foreign  loans  which 
had  been  accumulating  for  twenty  years  before.  At  the 
present  time  there  is  no  such  liquidation  going  forward.  In 
the  few  prosperous  years  which  succeeded  1879  there  was  a 
slight  Ijoom  on  the  English  Stock  Exchange  and  in  ship- 
building ;  a  still  stronger  inflation  in  the  United  States,  from 
whicli  in  turn  there  has  been  a  greater  reaction  than  any- 


TRADE   DEPRESSION   AND   LOW   PRICES.  11 

tliiug  witnessed  in  tljis  country,  tliough  tlie  inflation  uml 
reaction  even  in  the  United  States  are  both  smaller  than 
on  former  occasions ;  and  a  considerable  mania  on  tlie  Paris 
Bourse,  which  came  to  a  disastrous  close  in  1882.  But, 
taking  the  world  of  business  all  in  all,  there  was  in  1883  no 
such  accumulation  of  bad  business  all  round,  and  in  con- 
nection with  such  special  mischief  as  the  foreign  loans  craze, 
as  there  has  often  been  in  previous  periods  of  inflation. 
The  progress  of  a  period  of  inflation  to  its  usual  term 
appeared,  in  fact,  to  be  arrested  in  1882  ;  and  just  as  the 
inflation  was  less  marked  than  usual,  so  the  present  reaction 
exhibits  hardly  any  reduction  in  the  amount  of  business 
done.  If  there  were  not  some  special  reason  such  as  I 
believe  to  exist  in  the  condition  of  prices,  the  present  period 
would  hardly  appear  to  be  one  of  depression  at  all.  It  would 
be  described  at  what  it  really  is,  a  period  of  "marking  time" 
in  a  new  development  of  industry  which  commenced  at  the 
close  of  the  long  depression  which  ended  in  1879.  That 
depression  itself  involved  a  much  smaller  variation  in  the 
production  of  the  country  than  it  has  been  the  fashion  to 
represent ;  but  the  improvement  and  retrogression  which  has 
since  taken  place  are  both  on  a  very  different  scale  from 
those  which  went  before. 

AVliat  has  happened,  however,  at  the  present  time  is  a  very 
special  decline  of  prices.  A  fall  of  prices,  as  already  stated, 
is  a  usual  feature  in  every  depressed  period,  and  accentuates 
and  very  largely  creates  the  depression.  If,  then,  there  has 
been  an  unusual  fall  of  prices  of  late,  no  matter  from  what 
cause,  an  unusual  amount  of  gloom  is  very  easily  accounted 
for.  That  there  has  been  such  a  fall,  and  that  for  a  long  time 
past  the  course  of  prices  has  been-  such  as  specially  to  aftect 
trade  and  to  diminish  tlie  appearance  of  inflation  at  one  time 
and  to  aggravate  depression  at  another,  is  not  dillieuU  of  proof. 


12  TRADE   DEPRESSION   AXD    LOW   PRICES. 

The  facts  as  to  the  most  recent  decline  of  prices  are  stated 
in  the  "  Commercial  and  Financial  History  of  1884,"  given 
by  the  Statist  in  January  1885,  as  follows  : — 

"  The  conspicuous  featiire  of  the  year,  and  the  cause  of  its  unpro- 
fitableness as  far  as  wholesale  merchants  and  manufacturers  are 
concerned,  has  undoubtedly  been  the  remarkal)le  fall  of  prices  which 
has  taken  place.  Low  as  was  the  range  of  jjrices  at  the  time  when 
we  wrote  a  year  ago,  the  fall  of  the  jDast  year  not  only  brought  down 
that  range  of  prices  temporarily,  but  seems  to  have  brought  it  down 
in  a  lasting  manner,  the  low  range  having  now  continued  for  several 
months.  We  cannot  do  better  than  go  over  the  list  of  articles  in  our 
Tabular  Appendix. 

"  Beginning  with  iron,  we  find  that  Scotch  pig  iron  warrants,  which 
were  43s.  4(/.  in  January  last,  have  fallen  to  42.s.  3(?.  in  December, 
the  price  of  41.s.  2/.  having  been  touched  at  the  end  of  June,  and  even 
a  somewhat  lower  figure  than  what  appears  in  the  table  having  been 
quoted.  This  price  of  42s.  ^d.  in  December  compares  with  what  we 
noticed  as  the  very  low  price  of  47s.  6(?.  in  January,  1883.  Similarly 
Middlesbro'  No.  8  pig  iron,  which  was  42s.  6cZ.  in  January,  1883,  and 
37s.  in  January,  1884,  was  only  35s.  6cZ.  in  December.  Staifordshire 
bars,  which  were  £7  17s.  6/.  in  January,  ]883,  and  £7  12s.  6'Z.  in 
January,  1884,  were  only  £6  10s.  in  December.  Welsh  bars  (Wales), 
which  were  £5  17s.  G'/.  in  January,  1883,  and  £5  6s.  9J.  in  January, 
1884,  in  December  last  year  were  only  £5  2s.  6'/.  Copper  (Chili  bars), 
which  commenced  in  January,  1883,  at  £65  per  ton,  had  fallen  to 
£56  12s.  6(/.  in  January,  1884,  and  in  December  was  only  £48  per  ton. 
This  last  price,  it  is  noticed  in  the  trade  circulars,  is  not  only  about 
12  per  cent,  lower  than  the  lowest  price  upon  record  previously,  but 
30  per  cent,  lower  than  the  lowest  price  at  which  it  usod  to  be 
considered  that  the  article  could  profitably  be  produced.  Straits  tin, 
which  was  £92  15s.  per  ton  in  January,  1883,  and  £84  12s.  6'Z.  in 
January,  188t,  in  December  was  £75  only,  the  price  of  £73  15s. 
having  been  touched  in  October.  Tin-plates,  which  were  21s.  6'i.  j^er 
box  in  January,  1883,  and  21s.  in  January,  1884,  in  December  were 
19s.  only.  Lead,  which  was  £13  12s.  6'/.  per  ton  in  January,  1883, 
and  £12  7s.  6cZ.  in  January,  1884,  was  in  December  £11  Qs.  3t/.  only, 
the  price  of  £10  17s.  6(i.  having  been  touched  in  September.  In  coal, 
amongst  the  important  metals  and  minerals,  there  is  exceptionally 
hardly  any  change;  but  generally  it  may  be  said  that  there  is  at  least 
a  fall  of  10  to  15  per  cent,  during  the  past  year  in  these  leading 
articles,  and  a  fall  of  nearly  20  per  cent. — in  some  cases  of  more  than 
20  per  cent. — if  we  extend  the  comparison  for  two  years. 

"  In  chemicals  there  has  been  a  steady  fall  for  the  year.    Bleaching 


TRADE   DEPRESSION    AND    LOW   PRICES.  13 

powder,  from  lOs.  7 -id.  per  cwt.  in  January,  fell  to  7s.  lOi'Z.  in  December ; 
saltpetre,  from  24s.  3^/.  in  January  to  22s.  Gd.  in  December ;  and  soda, 
from  £3  14s.  per  ton  in  January,  to  £2  15s.  9d.  in  December.  In  these 
cases,  however,  the  fall  to  some  extent  has  only  been  the  loss  of  an 
advance  which  took  place  in  the  jirevious  year,  althoufjjh  the  range  is 
still  comparatively  low.  In  dyes  and  oils,  ])articularly  linseed  oil  and 
]ietroleum,  there  is  also  com])arativcly  little  change  for  the  year, 
although  the  range  of  prices,  it  must  be  understood,  is  somewhat 
low.     In  other  articles,  however,  there  is  a  decided  fall. 

"  Coming  to  textiles,  we  find  the  changes,  as  already  stated,  less 
marked.  In  cotton  there  has,  in  fact,  been  hardly  any  change  of  more 
than  a  fractional  kind  for  nearly  tw'o  years,  the  price  commencing  at 
6-^fi?.  per  lb.  in  January,  1883,  and  ending  at  5];^d.  per  lb.  in  December 
last,  the  highest  jirice  recorded  in  the  interval  being  6^d.  in  May, 
1884,  and  the  lowest  price  5^^d.  in  July,  1883,  and  October,  1884. 
The  price  of  yarn  manufactured  has  also  varied  very  little,  beginning 
at  Ofr/.  in  January,  1883,  and  also  ending  at  9id.  in  December  last. 
In  wool  likewise  there  has  been  very  little  change,  the  prices  of  the 
different  kinds  of  wool,  as  will  be  seen  from  the  details  in  one  of  the 
trade  reports  subjoined,  having  varied  in  different  directions.  The 
range  of  prices  in  wool,  it  must  be  understood,  is  comparatively  low. 
In  jute,  where  a  year  ago  some  recovery  had  taken  place  from  the 
extremely  low  i^rices  which  had  ruled  in  1883,  that  recovery  being  to 
£16  10s.  per  ton,  there  has  since  been  a  decided  fall,  the  price  at  the 
close  of  the  year  being  only  £12  15s.  per  ton.  In  silk  there  has  also 
been  a  somewhat  heavy  fall  during  the  two  years — namely,  from 
16s.  4:\d.  per  lb.  in  January,  1883,  to  15s.  3d.  per  lb.  in  January,  1884, 
and  13s.  dd.  in  December  last. 

"  Turning  next  to  the  chief  articles  of  food,  we  find  that  the  fall  has 
been  very  severe  indeed.  The  Gazette  average  price  of  wheat,  which 
•was  low  in  January,  1883,  at  40s.  4'/.  per  qr.,  was  only  38s.  in  January, 
1884,  and  in  December  was  31s.  5d.  only,  even  somewhat  lower  figures 
having  been  touched  during  the  autumn  months  ;  good  red  English 
Avheat,  weighing  63  to  64  lbs.  per  bushel  has,  in  fact,  lieen  sold  during  the 
year  at  a  i)rice  lower  than  the  Gazctfe  avei'age — namely,  at  29s.  jDcr  qr. 
Similarly,  the  price  of  red  wheat  per  bushel  in  New  York  has  fallen 
from  $1.18  in  January,  1883,  to  |1.5  in  January,  1884,  and  86c.  in 
December,  the  quotation  of  834 c.  being  actually  recorded  in  November. 
Maize  in  New  York  began  at  71jC.  per  bushel  in  1883,  and  fell  to  60c. 
in  January,  1884,  and  50c.  per  bushel  last  November,  recovering  in 
December  to  56c.  per  bushel.  In  barley  and  oats  the  foil  is  somewhat 
less,  but  still  there  is  a  slight  fall.  In  bacon  there  is  a  fall  from  69s.  per 
cwt.  in  January,  1883,  to  67s.  in  January,  1884,  and  63s.  in  December 
last.    In  cofiee  there  is  a  fall  from  77s.  6d.  in  January,  1883,  and  even 


14  TRADE   DEPRESSION   AND   LOW   PRICES. 

liigher  figures  iiuring  1883,  to  75s.  in  January,  1884,  and  67s.  6c?.  in 
December  last.  In  tea  during  the  past  year  there  is  apparently  a  rise 
from  5hf-  per  lb.  in  January  to  6-7.  in  December,  these  prices  being 
higher  than  those  of  1883.  but  being  still  a  comparatively  low  range 
of  prices.  In  sugar  the  greatest  decline  has  occurred,  the  decline 
being,  in  fact,  almost  uni)recedented  in  regard  to  any  article  of 
produce.  The  price  of  good  refining  West  India  was  20s.  per  cwt.  in 
January,  1883— a  low  price ;  but  in  January,  1884,  it  was  only  16s.  to 
16s.  6</.  per  cwt.,  while  the  price  in  December  last  was  only  9s.  9d.  to 
10s.  per  cwt.  Similarly,  beetroot  sugar  has  fallen  from  19s.  Ud.  per 
cwt.  in  January,  1883,  to  10s.  3(/.  per  cwt.  in  December  last. 

"  The  remarkable  feature  about  these  declines  in  price,  it  cannot  be 
too  often  repeated,  is  the  fact  that  they  have  occurred  after  a  range  of 
prices  had  already  been  established  which  was  so  low  as  to  excite  a 
great  deal  of  remark." 

It  is  clearly  unnecessary  to  assign  any  other  cause  for  the 
.c;loom  of  the  last  year  or  two.  Given  a  fall  of  prices  like 
what  is  here  described,  arising  from  any  external  cause 
whatever,  "  depression  "  must  ensue.  In  point  of  fact,  there 
have  been  serious  losses  and  failures  among  the  capitalist 
classes,  whose  outcry  gives  the  cue  to  public  discussion 
on  such  questions.  As  already  explained,  these  classes 
are  poorer  in  consequence  of  such  a  course  of  prices  as  is 
here  described,  wliile  they  feel  themselves  poorer  than  they 
really  are. 

The  point  to  which  I  would  now  draw  special  attention  is 
that  mentioned  in  the  last  paragraph  of  the  above  quotation. 
The  most  disastrous  characteristic  of  the  recent  fall  of  prices 
has  been  the  descent  all  round  to  a  lower  range  than  that  of 
which  tliere  had  been  any  previous  experience.  It  is  this 
peculiarity  which  more  than  anything  else  has  aggravated 
the  gloom  of  merchants  and  capitalists  during  the  last  few 
years.  Fluctuations  of  prices  they  are  used  to.  Merchants 
know  that  there  is  one  range  of  prices  in  a  time  of  buoyancy 
and  inflation,  and  quite  another  range  in  times  of  discredit. 
By  the  customary  oscillations  the  shrewder  business  people 


TRADE   DEPRESSION   AND   LOW    PRICES.  15 

arc  enabled  to  make  lar^^Q  profits.  But  during  the  last  few 
years  the  shrewder  as  well  as  the  less  shrewd  have  been 
tried.  Operations  they  ventured  on  when  prices  were  falling 
to  the  customary  low  level  have  failed  disastrously  because 
of  a  further  fall  which  is  altogether  without  precedent. 
Similarly  landowners  and  other  capitalists  who  are  usually 
beyond  the  reach  of  fluctuations  have  had  their  margins 
invaded ;  rents,  which  rose  so  steadily  for  twenty  years 
before  1873,  have  consequently  fallen  heavily ;  the  change  is 
more  like  a  revolution  in  prices  than  anything  which  usually 
happens  in  an  ordinary  cycle  of  prosperity  and  depression  in 
trade. 

Hence  the  special  connection  I  have  ventured  to  suggest 
between  the  present  depression  of  trade  and  low  prices.  But 
for  the  low  prices,  there  is  not  only  nothing  remarkable 
about  the  present  depression,  but  it  is  even  less  marked  than 
most  depressions  on  record  by  characteristics  of  severity  and 
duration.  The  low  prices,  however,  are  most  striking,  and 
have  sufficed  to  draw  to  it  attention  and  discussion  of  a  most 
unusual  kind  and  degree.  The  question  of  the  low  prices  them- 
selves, their  origin  and  probable  continuance,  and  the  various 
consequences  that  may  ensue,  thus  becomes  in  turn,  in  mv 
opinion,  the  question  of  most  interest  arising  out  of  the 
present  depression.  It  is  no  longer  a  side  issue  incidental  to 
the  problem  of  the  depression  itself.  The  effect  of  the  prices 
on  the  depression  becomes  interesting  mainly  by  way  of 
illustration  and  as  part  of  a  topic  of  wider  and  more  general 
interest. 


16  TRADE    DEPRESSION    AND    LOW   PRICES. 

III.— THE  HISTORY  OF  PRICES. 

A  MORE  extended  examination  of  the  facts  fully  confirms  the 
impression  that  prices  of  wholesale  commodities  have  lately 
fallen  far  beyond  a  customary  low  level.  To  appreciate 
fully  what  has  happened,  it  is  necessary,  indeed,  to  look 
more  closely  at  the  facts,  and  follow  the  movements  of 
prices,  not  only  of  late  years,  but  over  a  very  considerable 
period. 

Let  us  look  first  at  the  direct  evidence  as  to  the  recent 
fall  being  in  every  way  unusual.  In  1879,  in  a  paper  read 
before  the  Statistical  Society,  discussing  the  fall  of  prices 
which  had  then  taken  place,  I  produced  a  short  table,  which 
may  be  usefully  continued  to  the  present  date.  We  may 
read  clearly  in  it  how  great  has  been  the  descent  lately  as 
compared  with  what  it  was  even  in  a  year  like  1879  : — 

Prices  of  Leading  Wholesale  Commodities  in  Januaet,  1873, 
1879,  1883,  AND  1885,  compared. 

1873.         1879.         1883.         1885. 

Scotch  pig  iron,  per  ton    127^.        43s.  47^.8-1'.    ils.2d. 

Coals,  per  ton 50^-.         19s.  ijs.  6d.       18s. 

Copper,  Chili  bars,  per  ton  91/.  57/.  65/.         48i/. 

Straits  tin,  per  ton 142/.         CAI.  93/.         77i/. 

'\\heat,G<izctte  average,  per  qr.    ...  ^^s.  iid.  39s.  Id.  40J.  ^d.  34s.  lid. 

"      "^^^"'.^.J^:\   ^^-7°  $1-10       $i-i8        91c. 

Flour,  townmade,  per  sack /^js.6d.  37s.  38j-.  32s. 

„      Xew  York  price,  per  barrel    $7.5  $3.70       $4-3o  |3.25 

Beef,  inferior,  per  81bs 3^.10^/.  2s.  lOcZ.  4s.  ^d.        4s. 

„    prime  small,pcr  81bs S^- 3^-  4s.  9c/.         6^.  5s.  4c?. 

Cotton,  mid.  upland,  per  lb lod.  B^d.        SH^-         ^c?. 

AVool,  per  pack  23/.  13/.  12/.  HI. 

Sugar,  Manilla  musca,  per  cwt.  ...  21s.  6d.  16s.  i6s.  6d.  10s. 

Coffee,  Ceylon,  good  red,  per  cwt.       80s.  65s.  78^.  6d.      71s. 

Popper,  black  Malabar,  per  lb jd.  A^d.         5f^.  8d. 

Saltpetre,  foreign,  per  cwt 29^-.  19s.  igs.  15s.  3cZ. 

Thus,  in  hardly  any  case  was  the  price  in  January,  1885, 
highei;tlian  it  was  six  years  before,  and  while  in  those  cases 


TRADE    DEPRESSION    AND    LOW    PRICES.  17 

the    ])iice    was    not    much    higlier,    cotton    liein^'    the    most 
prominent  exam])le,  tlie  price  in  several  instances  is  notahly 
lower.     In  wheat  the  fall  is  very  marked,  and  also  in  su^ar 
and   copper.     Another  peculiarity  is  that  the  intermediate 
improvement  in  ])rice  hetwcen  18V9  and  1885,  as  shown  hy 
the  quotation  for  January,   1883,  is  only  to  a  point  very 
much  lower  than  in  1873,  which  was  the  starting-point  of 
the  table.     To  take  the  first  item  in  the  list,  pig  iron,  which 
fell  from  127s.  in  1873  to  43s.  in  1879,  only  rises  in  1883  to 
475.'  Sd. — a  somewhat  higher  price,  which  was  touched  for  a 
short  period  after  the  low  price  of  1879,  being  still  far  short 
of  the  price  quoted  for  1873,  which  was  itself  much  under 
the  highest  point  of  the  inliation  of  that  period.     Similarly, 
copper,  which    was    £91  per  ton    in    1873  and  fell  to  £57 
in  1879,  only  rises  in  1883  to  £65,  to  fall  in  1885  to  about 
£48.     Wheat  in  like  manner  falls  from  55.s.  lid.  in  1873  to 
39.S.  7d.  in  1879,  and  only  rises  to  40s.  4^/.  in  1883,  to  fall  to 
34s.  Ud.  in  1885.     Cotton  falls  from  lOd.  per  lb.  in  1873  to 
5fd.  in  1879,  and  has  only  risen  since  to  5-{-^d.  in  1883,  and 
M.  in  1885 — a  very  immaterial  rise  from  the  lowest  point  of 
1879,  though  in  this  instance,  as  already  noticed,  the  price 
in  1885  is  somewhat  higher  than  in  1883.     Thus,  we  have 
not  only  the  fact  of  a  descent  to  a  lower  range  of  prices  in 
the  present  depression  than  in  1879,  but  the  fact  tliat  in  the 
ijitermediate  period  of  good  trade  and  rising  prices  tlie  ascent 
was  very  far  short  of  the  high  level  which  had  been  reached 
in  1873.     In  other  words,  the  minimum  prices  of  the  period 
through  which  trade  has  passed  since   1879  are  not  only 
lower   than    the    minimum   prices  of  the    previous   period, 
bat  the  maximum  prices    are  also  lower  than  the  former 
maximum.     The  oscillations  are  altogether  at  a  lower  level. 
This  is  another  way  of  putting  the  fact  that  mercliants  anil 
capitalists  have  lately  encountered  a  descent  of  prices  below 
II.  C 


18  TRADE    DEPRESSION    AND    LOW    PRICES. 

the  customary  level,  which  has  greatly  put  them  out  and 
involved  them  in  fresh  and  most  unexpected  difficulties. 
The  mininuim  of  the  former  ]:)eriod  has  almost  become  the 
maximum  of  the  new,  and  operations  based  on  the  former 
customary  levels  have  failed. 

Takino-  a  still  more  extended  view  of  the  subject,  there 
seems  no  small  reason  to  believe  that,  whatever  may  be  the 
cause,  the  course  of  prices  in  the  wholesale  markets  has  of  late 
years  taken  a  decided  turn.  There  is  at  least  some  evidence 
that,  for  fifteen  or  twenty  years  after  1845-50,  prices  on  the 
average  tended  to  rise  from  period  to  period;  from  about 
1860  to  1873  they  were  comparatively  stationary,  oscillating 
between  the  higher  maxima  and  minima  which  had  come  to 
be  established  ;  and  since  1873  the  tendency  has  been  down- 
ward, the  oscillations  now  being  much  the  same  as  before 
1850,  if  not  at  a  somewhat  lower  level.  The  evidence  is  a 
little  intricate  and  technical  for  poxDular  statement;  but  it 
cannot  be  wholly  passed  over.  It  is  brought  to  a  point  by 
the  use  of  what  are  called  "index  numbers,"  which  Mr. 
Jevons  was  the  first  to  use  on  a  comprehensive  system. 
Instead  of  dealing  with  isolated  prices,  it  is  possible  by  means 
of  assigning  a  certain  value,  say  100,  to  a  particular  article, 
and  calculating  the  rise  or  fall  from  a  given  date  on  that 
value,  and  then  combining  a  number  of  articles  treated  in  a 
similar  manner,  to  bring  out  the  average  rise  or  fall  of  the 
gTOUp.  If  the  articles  selected  to  form  the  group  have  an 
original  value  assigned  to  them  at  all  proportioned  to  their 
importance  in  the  general  transactions  of  commerce,  then  tlie 
average  rise  or  fall  in  the  group  should  correspond  approxi- 
mately to  the  average  rise  or  fall  in  the  leading  articles  of 
trade. 

Among  the  best  known  of  these  index  numbers  is  that 
used  by  Mr.  Newmarch  in  tlrj  annual  commercial  history  of 


TRADE   DEPRESSION    AND    LOW   PRICES. 


19 


the  Economist.  In  the  paper  I  wrote  in  1879,  already  re- 
ferred to,  I  made  use  of  this  index  nnniLcr  to  show  the  real, 
magnitude  of  the  fall  in  the  latter  year,  and  to  illustrate 
some  points  in  the  course  of  prices  over  a  long  period  to 
which  I  am  now  drawing  attention,  and  tliis  index  num])er 
may  also  be  repeated  here  with  a  continuation  to  the 
present  date. 


I845-I850  .. 

..  2,200 

1874  .. 

..  2,891 

1857  .. 

..  2,996 

1875  .. 

..  2,778 

1858  .. 

..  2,612 

1876  .. 

..  2,711 

1865  .. 

..  3,575 

1877  .. 

..  2,715 

1866  .. 

..  3,564 

1878  .. 

..  2,554 

1867  .. 

..  3,024 

1879  •• 

..  2,202 

1868  .. 

..  2,682 

1880  .. 

..  2,538 

1869  .. 

..  2,666 

1881   .. 

..  2,376 

1870  .. 

..  2,689 

1882  .. 

..  2,435 

I87I 

..  2,590 

1883  .. 

..  2,342 

1872  .. 

..  2,835 

18S4  .. 

..  2,221 

1873   .. 

..  2,947 

1885  .. 

..  2,098 

From  this  it  will  be  seen  that,  while  the  average  prices  of 
1845-50  were  represented  by  the  index  number  2,200,  the 
minimum  ten  years  later — viz.,  1858 — was  2,612,  and 
the  maximum,  in  1865,  was  3,575.  In  1868-69,  the  next 
depressed  period,  the  figure  is  still  higher  than  in  1845-50, 
being  just  under  2,700,  and  in  1873,  the  next  inflated  period, 
the  maximum  is  2,947 — lower  than  in  1865,  but  nmch 
higher  than  the  average  of  1845-50.  In  1879,  however,  the 
figure  is  almost  exactly  the  same  as  the  average  of  1845-50 
— viz.,  2,202  ;  while  the  highest  point  touched  since  is  2,435, 
in  1882,  a  niucli  lower  figure  than  in  eitlier  1865  or  1873, 
and  the  mininuim  at  the  beginning  of  the  present  year  is 
2,098,  or  about  5  per  cent,  less  than  the  average  of  1845-50. 
The  course  of  this  index  number  thus  corresponds  very 
closely  witli  the  general  movement  of  prices  already  indi- 
cated— an  ascending  movement  after  1845-50  down  to  about 
1860-55,  a  high  level  of  prices  from  that  date  to  1873,  and 

c  2 


20 


TRADE    DEPKESSIOX   AND   LOW    PRICES. 


since  1873  a  descending  movement  ending  in  u  return  to  the 
low  level  existing  in  1845-50,  and  in  fact,  to  a  somewhat 
lower  level.  The  correspondence  would  have  been  still  more 
close  but  for  the  fact  of  this  index  number  appearing  to 
contain  a  disproportionate  number  of  articles  depending  on 
the  price  of  raw  cotton.  But  for  this,  the  figures  from  1865 
to  1873  would  not  have  been  quite  so  high  as  they  were, 
and  there  would  have  been  a  smaller  fall  between  those 
dates  than  what  the  figures  appear  to  show. 

The  next  index  numbers  I  shall  use  are  those  contained  in 
Parliamentary  Eeports  on  the  Prices  of  Imports  and  Exports 
which  were  compiled  at  the  Board  of  Trade  under  my  direc- 
tion.* According  to  these,  as  regards  the  exports,  prices 
have  not  been  so  low  since  1840  as  they  are  at  the  present 
time.  The  index  number  of  65 "8  falls  to  be  increased  or 
diminished  in  the  years  undermentioned  since  1840,  as 
follows : — 


Year. 

Increase. 

Decrease. 

Year. 

Increase. 

Decrease 

1840      . 

.     13-34 

1859     . 

0-40 

1841       . 

.     10-95 

., 

3865     . 

.       23-46 

1845      • 

.       G-05 

1868     . 

11-42 

1848      . 

..        2-43 

1873     . 

•      i9"93 

1849      . 

..        5-29 

1875     . 

.       8-67 

1852      . 

. 

..        6-47 

1876     . 

.          2-25 

1853      • 

..       ri4 

1877     . 

.'.'       0-40 

1854      . 

••      0-95 

1879     . 

..      610 

1855       . 

2-75 

1881     . 

. 

..      6-26 

1857       . 

."       u'77 

1883     . 

. 

..      5-95 

This  table,  unfortunately,  cannot  yet  be  brought  down 
later  than  1883,  but  it  shows  as  strikingly  as  the  previous 
table  the  liigher  range  of  prices  from  1865  to  1873  than 
there  was  about  1850,  and  the    descent  whicli   has   taken 


*  See  C.  2217,  Ses?.  1879;  C.  248-1,  Sess.  1880;  C.  3079,  Sess.  1881 ; 
and  C.  4456,  Sess.  lbi:5. 


TRADE   DEPRESSION    AND    LOW    PRICES. 


•21 


place  since  1873  to  the  level  of  1850.  As  tlie  prices  of  the 
exports  in  1884  were  undoubtedly  lower  than  in  1883,  there 
can  be  no  doubt,  when  this  table  is  continued,  of  wliat  the 
evidence  will  be. 

Similarly,  as  regards   the  imports,  the   index  numl^er  of 
81'16  falls  to  be  increased  or  diminished  as  follows  : — 


Year. 

Increase. 

Decrease. 

Year.             Inc 

•ease.         Decrease 

1854 

o-8o 

1876     .. 

..       3-61 

1855 

".     3 '51     .' 

1877     ..       . 

1-48 

1857 

.     7-08     . 

1878     .. 

..       7-04 

1859 

I    39 

1879     .. 

..     10-30 

1865 

'.   13-59     '. 

1880     .. 

..       6-39 

1868 

.     5-73     . 

1881     .. 

.       ..       6-99 

1873 

.     4-43     . 

1883     .. 

..      9-43 

1875 

.     0-2o     . 

It  is,  unfortunately,  impossible  as  regards  the  imports 
to  go  back  beyond  1854,  as  there  were  only  official 
prices  before  that  date,  but  it  is  at  least  evident  that  tlie 
level  of  prices  which  existed  after  1860  down  to  1873  has 
not  been  maintained.  The  level  of  prices  on  the  average 
reached  by  the  imports  does  not  seem  to  have  been  so  high 
as  that  reached  by  the  exports,  but  the  descent  has  been  to  a 
somewhat  lower  level.  The  general  movement  has  been  the 
same. 

The  evidence  is  thus  cumulative  as  to  what  the  course  of 
prices  has  been  since  1850,  and  as  to  the  general  course 
having  been  very  different  since  1860-73  than  it  was  before. 
Xot  only  does  the  index  number  prepared  by  Mr.  Newmarch 
many  years  ago,  and  without  any  possible  foresight  of 
existing  controversies,  support  this  view,  but  index  numbers 
based  entirely  on  the  actual  proportions  to  each  other  of  the 
different  articles  of  our  foreign  trade  bear  testimony  to  the 
same  fact.  It  is  impossible  to  suppose  that  any  other  index 
numbers  which  could  be  impartially  constructed  would  yield 


22  TRADE    DEPRESSION    AND   LOW    PRICES. 

iiny  other  result.  Every  important  article  of  commerce  is 
included  in  them,  and  the  oscillations  of  prices  they  respec- 
tively indicate  synchronize  in  a  striking  manner. 


IV.— THE  QUESTION  OF   GOLD  SCARCITY. 

The  question  then  arises  on  these  figures  whether  the 
depression  at  a  time  like  the  present  may  not  be  largely  due 
to  some  permanent  cause  which  has  lately  begun  to  operate ; 
to  which  trade  was  not  subject  for  many  years  after  1850, 
and  which  is  now  in  full  operation ;  and  which  has  for  its 
effect  to  prevent  a  rise  of  prices  in  good  years  to  what  was 
long  considered  the  customary  maximum,  and  to  precipitate 
a  fall  in  bad  years  to  a  point  much  below  the  customary 
minimum.  That  the  answer  must  be  in  the  affirmative 
appears  to  be  very  clear.  There  is  no  mystery  at  all  about 
the  actual  course  of  prices,  while  the  effect  of  the  recent 
changes  in  diminishing  the  profits  of  capitalists,  because  the 
upward  movement  of  prices  is  less  than  they  expect,  and  the 
downward  movement  greater,  is  equally  palpable.  Merchants 
and  capitalists  all  round  have  suffered.  They  have  held  stocks 
longer,  or  bought  stocks  sooner,  than  they  would  have  done 
if  they  had  not  to  some  extent  lost  their  bearings.  Their 
gloom  is  great,  because  prices  are  obstinately  low.  Whatever 
may  be  the  cause  of  so  great  a  change,  it  is  surely  worth 
investigation. 

Two  causes  only  have  been  suggested.  One  is  a  great 
multiplication  of  commodities  and  diminution  of  the  cost  of 
pr(jduction  due  to  the  progress  of  invention,  improved 
facilities  of  communication,  lower  freights,  international 
telegraphy,  and  the  like  circumstances.     The  other  is,  that 


TRADE    DEPRESSION    AND    LOW    PRICES,  23 

the  precious  inctal  used  for  standard  money — \\/..,  gold — lias 
become  relatively  scarcer  than  it  was,  its  production  being 
diminished  on  the  one  hand,  and  the  demands  for  it  on  the 
other  hand  increased.  The  former  of  these  causes  was  dis- 
cussed quite  lately  by  Mr.  Fowler,  in  the  Contcmporarij 
Review,  and  a  greater  weight  assigned  to  it  than  to  the 
latter  cause.  I  am  disposed  to  give  the  greater  weight  to 
the  latter.  To  a  large  extent,  however,  the  two  causes  are 
not  in  contiict.  The  question  is  of  money  prices — the  rela- 
tion of  money  to  commodities.  Whether  it  is  commodities 
that  multiply,  or  gold  that  diminishes  or  does  not  multiply 
m  proportion,  the  relation  between  gold  and  the  mass  ol 
commodities  is  equally  changed.  Tt  is  quite  conceivable  that 
if  gold  were  to  increase  in  quantity  and  its  cost  of  production 
to  diminish,  as  other  commodities  increase  in  quantity  and 
have  their  cost  of  production  diminished,  there  would  be  no 
change  of  any  kind  in  gold  prices.  Commodities  would  be 
more  abundant,  but  the  abundance  would  make  itself  felt  in 
a  rise  of  money  wages,  salaries,  rents,  and  profits,  and  not  in 
lower  prices.  That  it  is  felt  in  lower  prices  now  appears  to 
be  absolute  proof  that  the  relation  between  gold  and  commo- 
dities has  changed,  that  they  have  not  increased  in  quantity 
and  had  their  cost  of  production  diminished  ^mri  pass2i.  In 
addition,  however,  while  not  denying  that  there  has  been  a 
change  on  the  commodities  side  of  the  balance,  I  woiUd  go 
farther  and  maintain  that  what  has  happened  to  gold  in  the 
way  of  diminished  production  and  increased  demands  upon 
it,  arising  from  other  causes  than  the  multiplication  of 
commodities,  must  have  had  great  effect. 

The  evidence  can  be  stated  very  briefly,  and  I  am  the  less 
disposed  to  go  into  it  as  it  is  described  at  some  length,  as  far 
as  the  facts  were  known  at  the  time,  in  the  paper  on  the  fall 
of  prices  written   in  1870,  to   which  reference  has  already 


24  TRADE    DEPRESSION   AND    LOW    TRICES. 

been  made.     The  new  facts  since  that  date,  however,  have 
fully  confirmed  what  it  was  only  possible  then  to  anticipate. 

The  initial  fact  is  the  diminution  of  annual  production 
which  has  occurred  since  1860  as  compared  with  what  it  was 
immediately  after  the  Australian  and  Californian  gold  dis- 
coveries. In  1852-56  the  average  annual  production  was 
about  thirty  millions  sterling ;  in  1857-61  it  was  twenty- 
five  millions ;  in  1862-66,  twenty-three  millions ;  in  1867- 
71,  twenty-two  millions  ;  in  1871-75,  nineteen  millions  ;  and 
.since  1875  there  has  been  no  increase  of  production,  l)ut 
rather  a  decrease.  It  is  impossible  to  suppose  that  no  effect 
on  prices  was  produced  by  the  vast  production  thirty  years 
ago,  especially  as  that  production  had  to  be  infused  into  a 
smaller  mass  than  has  the  present  i)roduction,  so  that  the 
effect  was  all  the  greater.  But  for  the  substitution  of  gold 
for  silver  in  France,  which  absorbed  a  large  part  of  the 
new  production,  the  effect  on  prices  would  have  been  much 
greater  than  it  was.  As  matters  stand,  an  actual  rise  of 
prices  between  1850  and  1865  corresponded  to  the  large  new 
production  of  gold.  It  is  equally  impossible  to  suppose 
now  tliat,  along  with  a  diminished  production,  prices  could 
lately  have  gone  up  as  they  did  after  1850. 

"VVe  have  next  tlie  facts  as  to  the  extraordinary  demands 
for  gold  since  about  1872.  In  that  year  the  gold  coinage  of 
Germany  commenced,  and  from  first  to  last  that  operation 
has  absorbed  about  80  millions  sterling.  Writing  in  1879  it 
was  only  possiljle  to  anticipate  a  new  demand  for  the  United 
States,  whose  return  to  specie  payments  in  1878  then 
threatened  such  a  demand.  But  tlie  demand  for  the  United 
States  has  been  fully  up  to  the  anticipation.  The  imports  of 
gold  into  that  country  since  1878,  less  the  exports,  have 
amounted  at  least  to  34  millions  sterling — imports  55 
millions,  exports  21  millions — while  the  domestic  production 


TRADE   DEPRESSION    AND    LOW    PRICES.  J  3 

in  the  same  })L'rio(l,  which  has  all  been  ahsorhed  at  home,  lias 
amounted  to  48  millions.  The  total  is  82  millions,  or,  in 
round  figures,  another  extraordinary  <leniand  of  80  millions 
to  be  added  to  the  German  demand.  There  has  been  another 
extraordinary  demand  for  Italy  during  the  last  few  years, 
amounting  to  nearly  20  millions  sterling,  besides  smaller 
demands  for  Holland  and  the  Scandinavian  countries.  In 
round  figures,  therefore,  there  have  been  new  demands  in  the 
last  thirteen  years  for  about  200  millions  of  gold,  an  amount 
very  nearly  equal  to  the  whole  production  of  the  period, 
although  a  larger  amount  than  the  annual  producti(jn  of  that 
period  had  been  necessary  in  previous  years  to  maintain  the 
state  of  prices  which  then  existed.  As  the  maintenance  of 
equililtriuui  in  the  matter  of  prices  is  only  possible,  other  things 
being  equal,  by  means  of  a  supply  of  gold  to  meet  the  wear 
and  tear  of  com  and  the  increase  of  the  population  using  gold 
in  numbers  and  wealth — and  the  ordinary  demands  of  that 
kind  before  1872,  amounted  in  fact  to  12  millions  sterling 
annually — it  is  difficult  to  imagine  how  all  these  extraordinary 
demands  could  have  existed  without  contributing  to  that 
change  in  the  course  of  prices  which  we  should  have  expected 
beforehand  as  the  consequence,  and  which  has  in  fact  occurred. 
In  point  of  fact,  there  has  been  a  material  change,  coin- 
cident with  the  fall  of  prices  which  has  been  described,  in 
the  consumption  of  gold  in  the  coinage  of  the  Ignited 
ICingdom  as  compared  with  what  it  was  when  prices  were  at 
a  higher  level.  In  1861-70  the  annual  gold  coinage  of  the 
United  Kingdom  was  about  5  millions  sterling,  the  amount  in 
1871  being  nearly  10  millions,  and  the  amount  in  1872  being 
just  over  15  millions.  Tlic  average  of  the  period  1874-83  has 
been  one  and  a  half  millions  sterling  only,  while  in  1881-82 
there  was  no  coinage  at  all;  in  1879,  £35,000  only  was 
coined;  in  1877,  £081 , (KM.)  only;  and  in  1  875,  £243,000  only. 


26  TKADE    DEPRESSION   AND    LOW   PRICES. 

The  deficiency  has  been  partly  made  up  by  an  annual  import 
of  about  £2,000,000  from  xVustralia ;  Init  in  any  view  the 
total  consumption  of  gold  in  British  coinage  has  been  less 
than  it  was,  whereas  to  meet  the  increase  of  population  and 
wealth  it  ought  to  have  been  sensibly  larger. 

The  course  of  the  money  market  has  also  been  such,  I 
believe,  as  to  indicate  a  strain  upon  the  supplies  of  gold.  It 
is  sometimes  argued  that  if  gold  had  been  really  scarce  in 
the  last  ten  or  twelve  years,  the  rate  of  discount  and  the 
interest  of  money  would  have  been  higher  than  they  were 
when  gold  was  relatively  more  abundant.  Consequently,  it 
is  said  that,  as  the  rate  of  discount  and  the  interest  of  money 
have  been  lower  than  they  were,  the  evidence  of  the  money 
market  rather  is  that  gold  has  not  been  scarce.  Over  long- 
periods,  however,  the  rate  of  discount  and  the  interest  of 
money  do  not  depend  on  the  scarcity  or  abundance  of 
"money,"  using  the  term  in  its  strict  sense,  but  on  the 
scarcity  or  abundance  of  capital  relative  to  the  demands  of 
borrowers.  There  may  be  any  conceivable  rates  of  discount 
and  rates  of  interest  for  money  at  any  conceivable  range  of 
prices  for  commodities.  The  way  scarcity  or  abundance  of 
gold  would  tell  upon  the  money  market  would  be  by  pro- 
ducing momentary  stringencies  and  periods  of  temporary 
difficulty  and  discredit,  ])y  which,  perhaps,  the  tendency  to 
inflatidii  in  ])iices  at  one  time  would  be  checked,  and  the 
tendency  to  depression  at  another  would  be  aggravated. 
The  average  rates  over  the  whole  period  when  these  strin- 
gencies were  occurring  might  be  lower  than  at  times  when 
they  were  fewer,  but  the  mere  fact  of  successive  stringencies 
would  help  to  produce  the  effect  described  on  prices.  oSTow, 
the  course  of  the  money  market  since  1871,  when  the  German 
Government  began  to  draw -gold  from  London,  has  been  full 
of  sucli  stringencies.     The  crises  of  1873  and  1875  were  no 


TRADE   DEPRESSION    AND   LOW    PRICES.  27 

(k)u1)t  precipitated  liy  tlicni,  and  since  187G,  in  almost  every 
year  except  1879  and  1880,  there  has  been  a  stringency,  of 
greater  or  less  severity,  directly  traceable  to,  or  aggravated 
by,  the  extraordinary  demands  for  gold  and  the  difficulty  of 
supplying  them. 

Looking  at  all  the  facts,  therefore,  it  appears  impossible  to 
avoid  the  conclusion  that  the  recent  course  of  prices,  so 
different  from  what  it  was  just  after  the  Australian  and 
Californian  gold  discoveries,  is  the  result  in  piirt  of  the 
diminished  production  and  the  increased  extraordinary  de- 
mands upon  the  supply  of  gold.  It  is  suggested,  indeed,  that 
the  increase  of  banking  facilities  and  other  economies  in  the 
use  of  gold  may  have  compensated  the  scarcity.  But  the 
answer  clearly  is  that  in  the  period  between  1850  and  18 05, 
and  down  to  1873,  the  increase  of  banking  facilities  and 
similar  economies  was  as  great  relatively  to  the  arrangements 
existing  just  before  as  anything  that  has  taken  place  since. 
The  same  reply  may  also  be  made  to  the  suggestion  that  the 
multiplication  of  commodities  accounts  for  the  entire  change 
that  has  occurred.  There  is  no  reason  to  suppose  that  the 
multiplication  of  commodities  relatively  to  the  previous  pro- 
duction has  proceeded  at  a  greater  rate  since  1873  than  in 
the  twenty  years  before  that.  Yet  before  1873  prices  were 
rising,  notwithstanding  the  multiplication  of  commodities ; 
and  since  that  date  tlie  tendency  has  been  to  decline.  The 
one  thing  which  has  changed,  therefore,  appears  to  be  the 
supply  of  gold  and  the  demands  upon  it ;  and  to  that  cause 
largely  we  must  accordingly  ascribe  the  change  in  the  course 
of  prices  which  has  occurred. 

The  final  test  would  be  whether  wages,  rents,  and  profits 
were  also  falling.  The  community,  as  we  liave  seen,  may 
benefit  in  one  of  two  ways  by  the  abundance  and  multipli- 
cation of  commodities — by  a  rise  of  wages,  ])rofits,  and  rent, 


28  TRADE   DEPRESSION   AND    LOW   PRICES. 

the  different  forms  of  the  return  to  labour  and  capital,  while 
money  prices  remain  the  same  ;  or  by  a  fall  of  prices  while 
money  wages,  profits,  and  rent  are  maintained,  or  at  least  do 
not  fall  in  proportion  to  prices.  If  prices  have  fallen,  there- 
fore, on  the  average,  we  should  not  expect  the  same  rise  in 
wages  or  in  the  return  to  capital  as  took  place  when  prices 
were  rising.  The  facts  are  unfortunately  too  recent  to  enable 
us  to  illustrate  this  point,  but  there  are  not  wanting  signs 
that  this  final  test  will  be  met.  There  has  been  no  marked 
increase  in  the  rates  of  wages  since  1873,  and  there  are  now  in 
all  directions  reports  of  strikes  and  lower  wages  ;  rents  are 
undoubtedly  falling ;  the  income-tax  assessments  have  in- 
creased more  languidly  since  1875  than  they  did  for  many 
years  before ;  the  returns  of  property  liable  to  legacy  and 
succession  duty,  though  these  are  most  difficult  to  follow 
owing  to  the  naturally  great  fluctuations,  would  also  appear 
of  late  years  to  have  been  stationary  or  declining.  The  very 
things  are  happening  which  we  should  have  expected  to 
happen  if  there  had  been  a  pressure  upon  gold. 


v.— CONCLUSIONS. 

If  the  facts  arc  at  all  as  has  been  stated,  we  seem  to  be 
justified  in  one  or  two  conclusions  of  no  small  interest.  One 
is  that  we  can  hardly  be  sure  yet  that  the  causes  of  the 
recent  .change  in  the  course  of  prices  have  fully  worked  them- 
selves out.  For  the  present,*  the  tide  appears  to  have  turned. 
Prices  all  round  are  somewhat  higher  than  they  were  at  the 
end  of  last  year,  and  the  state  of  the  money  market  is  such 
that  a  further  rise  may  be  supported  without  a  stringency 
supervening.     But  we  should  still  rather  expect  from  period 

*  This  was  written  in  May  1885. 


TRADE   DEPRESSION   AND    LOAV   PRICES.  29 

to  period  a  tendency  in  prices  to  fall.  The  annual  production 
of  gold,  not  having  increased  for  ten  or  fifteen  years,  but 
Imving,  if  anything,  slightly  diminished  and  tending  still  to 
diminish,  is  now  even  less  in  proportion  to  the  whole  stock  in 
use  than  tlie  annual  production  was  to  the  stock  in  use  ten  or 
fifteen  years  ago.  I'opulation  and  wealth  at  the  same  time 
are  increasing  at  even  a  greater  rate  than  they  did. 

This  last  conclusion  remains  true,  and  applies,  indeed,  with 
all  the  more  force,  if  we  agree  with  those  who  attach  more 
weight  to  the  multiplication  of  commodities  than  to  any- 
thing which  has  lately  happened  to  gold.  It  is  easy  to  see 
that,  if  the  extraordinary  changes  in  relation  to  gold  have 
counted  for  anything  in  the  recent  course  of  prices,  then  the 
changes  of  prices  yet  in  store,  though  they  may  continue  in 
tlie  same  direction,  may  not  be  quite  so  violent  as  those 
which  are  past.  But  if  these  extraordinary  changes  in 
relation  to  gold  count  for  little,  then  the  prospect  as  regards 
the  future  is  that  of  a  more  rapid  and  violent  fall  in  prices 
than  anything  which  has  yet  occurred.  The  multiplication 
of  commodities  goes  on  with  ever-increasing  intensity,  accord- 
ing to  the  best  authorities.  An  average  fall  of  prices  from 
period  to  period  must  be  the  inevitable  consequence,  and,  if 
the  recent  fall  has  not  been  aggravated  by  something  which 
has  happened  in  relation  to  gold,  we  must  expect  very  great 
changes  in  prices  indeed.  Attaching  great  weight  myself  to 
the  pressure  on  gold,  I  look  for  more  moderate  changes  in 
average  prices  in  the  future  than  those  which  have  lately 
occurred :  but  those  who  argue  against  giving  weidit  to  the 
scarcity  of  gold  are  shut  up  to  the  expectation  of  rather 
serious  changes.  That  the  course  of  prices  is  on  the  whole 
likely  to  be  downwards  in  future,  the  upward  course  after 
1850  having  only  occurred  by  way  of  exception  to  the 
general  rule,  may  at  least  be  admitted.     It  depends  in  part 


30  TRADE   DEPKESSION   AND   LOW   PRICES. 

Oil  a  peculiarity  of  the  precious  metals  in  relation  to  the  cost 
of  production.  There  is  an  intrinsic  difficulty  in  the  way  of 
an  increase  of  a  standard  metal  used  as  money  proportionate 
to  the  increase  of  the  commodities  which  it  moves.  As  the 
latter  are  renewed  incessantly,  an  increase  of  the  means  of 
production  increases  the  whole  mass  on  the  market  at  any 
given  time.  As  the  precious  metals  in  use,  however,  exist  in 
masses  enormously  greater  than  the  whole  annual  production, 
an  increase  of  the  means  of  production  equal  to  what  takes 
place  in  other  commodities  only  means,  in  the  case  of  gold, 
an  increase  of  a  fraction  of  the  whole  mass  in  use.  There  is, 
accordingly,  a  permanent  tendency  to  change  in  the  relation 
of  commodities  to  gold.  If  this  tendency  is  aggravated  at 
any  moment  by  a  diminished  production  of  gold  itself  and  a 
special  strain  upon  its  use,  the  effect  on  prices  will  be  aggra- 
vated, and  changes  of  prices  like  what  have  been  lately  seen 
will  be  less  surprising ;  but  without  this  aggravation  the  per- 
manent tendency  seems  necessarily  downwards.  The  increase 
of  the  means  of  production,  in  order  to  keep  the  supply 
of  gold  proportioned  to  that  of  commodities,  should  be  at  a 
greater  rate,  and  should  be  proportioned  in  some  way  to 
the  mass  of  gold  existing,  and  not  to  its  annual  produc- 
tion. But,  in  fact,  the  annual  production  of  gold  is  main- 
tained with  difficulty,  wliile  that  of  all  other  commodities 
increases. 

What  will  be  the  effects  on  trade  in  the  future  of  such  a 
course  of  prices  as  there  seems  reason  to  anticipate  ?  I  am 
disposed  to  conclude  that  there  will  probably  be  less  inflation 
and  less  of  the  buoyancy  and  enterprise  that  accompany  in- 
flation than  there  would  other\vise  be  ;  but  there  will  also  be 
less  of  the  paralysis  and  disasters  which  attend  great  inflations, 
and  trade  generally  will  be  sounder.  There  will  be  fewer 
ups  and  downs,  but  more  cpiiet,  patient,  and  steady  industry. 


TRADE    DEPRESSION    AND   LOW   PRICES.  31 

There  will,  however,  he  more  "depression"  from  time  to 
time.  Lower  and  lower  prices  must  affect  men's  spirits, 
lessen  money  profits  as  compared  with  what  they  would  be  if 
prices  were  steady,  and  diffuse  an  impression  that  business 
is  not  going  well.  One  year  with  another,  I  sliould  expect 
in  future  much  louder  and  more  persistent  expressions  of 
discontent  than  there  have  been  in  the  past.  Eeduction  of 
money  wealth,  or  even  its  slow  increase,  will  be  spoken  of  as 
if  the  real  changes  were  the  same. 

For  the  students  of  economic  history  and  statistics,  the 
future  problem  is  excessively  important.  The  figures  we 
shall  have  to  deal  with  will  be  much  more  difficult  than  if 
circumstances  were  to  favour  steady  and  ever-rising  prices  as 
they  did  for  many  years  after  1850.  Owing  to  these  circum- 
.stances  changes  in  value  in  imports  and  exports,  income-tax 
assessments,  and  the  like  figures  corresponded  fairly  well  from 
period  to  period  with  changes  in  the  quantities  of  business 
done  and  of  wealth.  Of  late  years  this  has  not  been  the  case, 
the  figures  being  already  more  difficult,  and  the  difficulty 
will  continue  and  increase.  The  aggregates  of  trade  already 
can  no  longer  be  stated  witliout  allowances  for  differences  of 
price.  What  the  difficulty  may  become  over  a  long  period 
may  be  perceived  by  reference  to  the  past.  From  1805  to 
1820  the  declared  values  of  our  exports  ranged  from  about 
30  to  45  millions  sterling  annually,  the  total  of  nearly  52 
millions  being  reached  in  1815.  No  higher  totals  were 
reached  for  many  years  after,  and  it  was  not  till  1836  that 
the  high  total  of  1815  was  surpassed,  and  not  till  1840  that 
the  figures  were  steadily  higher.  All  the  while  the  quantities 
of  goods  moved  in  the  foreign  trade  were  increasing,  the 
entries  and  clearances  of  shipping  being  in  1830  about  7 
luilliou  tons,  or  almost  exactly  double  the  tonnage  at  the 
beginning  of  the  century.     Similarly,  the  income-tax  assess- 


32  TRADE    DEPRESSION    AND    LOW    PRICES. 

ments  of  1843  showed  a  very  moderate  increase  upon  those 
of  1815,  nearly  thirty  years  before,  and  it  was  not  till  1850 
that  they  began  to  increase  by  leaps  and  bounds.  Those  who 
are  interested  in  economic  statistics  should  accordingly  be 
prepared  for  future  difficulties  of  a  kind  which  hardly  existed 
for  many  years  after  the  Free  Trade  period  commenced. 
This  question  of  prices  affects  deeply  almost  every  problem 
of  economic  history. 

The  question  will  not  fail  to  be  asked— Ought  nothing  to 
be  attempted  to  alter  the  course  of  events  which  is  thus 
anticipated?  According  to  the  opinions  already  expressed, 
there  is  certainly  no  need  to  do  anything.  If  trade  on  the 
whole  will  be  sounder  and  industry  steadier  under  a  regime 
of  slowly  falling  prices  than  it  would  otherwise  be,  it  will  be 
as  well  to  let  things  alone.  But  it  is  almost  certain  that, 
under  the  circumstances  anticipated,  currency-mongers  will 
come  to  the  front,  as  bi-metallists  are  already  to  the  front. 
Pushing,  active  men  of  business  find  slowly  falling  prices 
intolerable,  and,  speaking  of  it  as  an  evil,  they  can  hardly  fail 
to  raise  the  sort  of  questions  which  were  raised  and  hotly  dis- 
cussed for  many  years  ]U'ior  to  the  Bank  Act  of  1844.  It  would 
be  out  of  place  to  discuss  by  anticipation  any  of  the  projects 
which  are  not  unlikely  to  be  put  forward.  I  would  only 
point  out  that  if  there  is  any  truth  in  the  account  of  the 
question  here  given,  the  remedies  proposed  by  bi-metallists, 
or  by-  authors  of  schemes  for  inconvertible  paper,  apart 
altogether  from  the  objections  of  principle  to  such  remedies, 
will  be  wholly  inapplicable  to  the  evil,  or  alleged  evil,  to  be 
cured.  The  essence  of  all  such  schemes  is  to  prevent  or 
mitigate  a  fall  of  prices,  or  to  create  a  rise  of  prices  by  an 
immediate  abundance  of  money.  But  the  effect  is  necessarily 
transitory.  The  permanent  causes  of  the  scarcity  of  money 
in   relation   to   commodities    remain,    and    the    momentary 


TRADE   DEPRESSION    AND    LOW    PRICES.  .):; 

ubundaucG  must  ])0  succeeded  quickly  1>y  tlie  siuuo  relative 
scarcity  as  l)etV>ri!.  The  case  against  bi-iiietallists  on  this 
score  is  very  stroiiji;.  (lold  and  silver  beiu^-  e([ualised,  assum- 
iufT  the  bi-inetallic  scheme  to  be  successful,  the  future  course 
of  prices  will  l)e  regulated  by  the  aggregate  annual  production, 
not  of  the  one  metal,  but  of  the  two.  The  proportion  of  that 
jinnual  production  to  the  stocks  of  the  two  in  use  is,  however, 
nnich  the  same  as  the  proportion  of  the  production  of  the  one 
metal  to  tlie  stock  of  that  metal  only.  The  future  course  of 
prices  will  accordingly  be  much  the  same  as  if  one  metal  onl}- 
were  used  in  a  particular  country.  The  multiplication  of 
i'ommodities  out  of  all  proportion  t<>  the  increased  means 
of  i)roduction  of  the  precious  metals  will  go  on,  and  falling 
prices  will  ine vital  )ly  result. 

My  remarks  have  already  gone  to  so  great  a  length  as  to 
leave  me  little  space,  even  if  the  topics  would  have  come  into 
the  frame  of  my  article,  for  the  discussion  of  other  alleged 
•causes  of  the  existing  depression,  and  the  remedies  for  it. 
But  I  may  be  permitted  one  or  two  observations.  The 
principal  of  these  alleged  causes  are  the  foreign  bounty 
system,  the  protective  tariffs  of  foreign  countries,  and  foreign 
competition ;  and  the  corresponding  remedies  are  counter- 
vailing duties,  duties  on  foreign  manufactures  imported  into 
this  country  without  any  corresponding  excise  duties  on 
articles  manufactured  in  this  country,  and  various  schemes  of 
imperial  and  colonial  confederation,  coupled  or  not  coupled 
with  differential  duties  on  the  imports  of  colonial  products. 
As  regards  all  such  causes  and  remedies,  what  has  already 
been  said  shoukl  help  to  show  that  the  causes  can  neither 
have  much  to  do  with  the  depression  nor  will  the  remedies  at 
all  apply.  What  they  have  to  do  with  is  rather  the  more 
permanent  conditions  of  the  country's  trade,  than  the  lluctua- 

II.  D 


34  TRADE    DEPRESSION    AND    LOW    PRICES. 

tions  of  inflation  and  depression,  which  are  necessarily  tran- 
sitory in  their  nature.  It  is  easy  to  show,  moreover,  that  the 
alleged  causes  can  have  little  to  do  with  the  existing  state  of 
things  as  compared  with  a  cause  like  low  prices,  or  with  the 
more  general  causes  of  depression,  which  always  exist,  and 
which  make  depression  follow  prosperity  as  night  follows  day. 
Bounties,  protective  tariffs,  and  foreign  competition  have  all 
been  in  existence  for  a  score  of  years  and  more  in  as  aggra- 
vated a  form  as  they  are  now.  Even  before  1873,  which  was 
a  period  of  almost  unparalleled  inflation,  bounties,  foreign 
tariffs,  and  foreign  competition  were  all  the  subject  of  com- 
plaint. Forty  and  fifty  years  ago  they  existed  in  a  very 
intense  form,  the  foreign  tariffs  at  least  being  higher  than  they 
have  since  been  or  are  now.  But  trade  has  had  its  ups  and 
downs  irrespective  of  them,  and  as  it  has  been  in  the  past  so 
we  may  be  sure  will  it  be  in  the  future.  Our  welfare  does 
not  depend  on  any  external  causes,  or  on  any  injury  which  it 
is  in  the  power  of  foreign  governments  to  inflict,  but  on  our 
own  industry  and  energy.  If  our  trade  is  diverted  at  all  by 
external  causes,  it  will  find  other  channels,  so  long  as  the  will 
and  determination  to  use  our  great  resources  of  capital  and 
organised  labour  exist.  It  is  obvious,  besides,  that  an  alleged 
cause  of  trade  depression  like  foreign  bounties  is  so  infinites - 
imally  small  in  itself  as  to  make  it  simply  astoundingt  hat 
it  should  ever  be  cited  in  this  connection  at  all.  The  only 
bounty  as  yet  seriously  complained  of  is  that  on  sugar- 
refinin<T.  But,  while  the  amount  of  sugar-refining  at  home 
has  rather  increased  in  the  last  twenty  years,  it  is  found, 
when  the  facts  are  looked  at,  that  the  whole  return  to  labour 
and  capital  employed  in  this  particular  trade  is  only  two  or 
three  millions  per  annum,  as  compared  with  aggregate  earn- 
inrrs  by  the  whole  country  of  1200  millions  and  more.  How 
can  the  up  or  down  in  so  small  an  industry  ha\-e  anything  to 


TRADE    DEPRESSION   AND    LOW    PRICES.  3') 

do  with  geuer;il  trade  depression,  in  wliieli  evcni  a  fluetuation 
of  one  per  cent,  would  diniinisli  or  increase  tlie  earnings  of 
tlie  community  by  many  times  the  amount  of  the  earnin,f,'s  of 
this  one  trade?  It  is  tlie  same  to  a  less  dej^ree  with  the 
trades  affected  by  forei,g-n  tariffs  or  foreign  competition. 
Changes  in  these  factors  only  affect  a  portion  of  our  total 
trade,  whose  main  stream  is  hardly  influenced  by  them  in 
comparison  with  what  other  causes  effect.  As  a  consequence, 
the  special  remedies  proposed  to  meet  bounties,  tariffs,  and 
foreign  competition,  apart  from  all  objections  to  them  on 
other  grounds,  would  not  mitigate  the  depression  one  iota,  or 
prevent  the  recurrence  of  depression  some  other  time.  The 
causes  of  ups  and  downs  in  trade  and  the  permanent  causes 
of  low  prices  which  have  been  descriljed  would  remain  what 
they  are,  and  the  consequences  would  also  be  the  same,  if 
they  were  not  aggravated  by  the  specially  mischievous 
character  of  the  attempted  remedies. 

Meanwhile,  it  is  not  unpleasant  to  recognise  that  there  are 
one  or  two  signs  of  the  present  depression  passing  away.  In 
the  United  States,  where  matters  happen  to  have  been  worse 
than  they  are  here,  the  traffic  of  the  railway  companies  has 
begun  once  more  to  increase.  This  is  an  excellent  si<Tn 
l*rices  all  round,  as  already  noticed  incidentally,  have  also 
begun  to  pick  up,  sugar  and  many  other  commodities  being 
all  appreciably  higher  than  they  were  some  months  ago. 
According  to  all  experience,  a  period  of  low  i)rices  like  that 
through  which  the  country  has  been  i)assing  is  invariably 
good  for  trade.  The  masses  of  the  community  save  more 
with  low  prices  than  they  can  do  at  other  times,  and  these 
savings  in  time  furnish  an  additional  demand  for  commodities 
and  additional  employment  for  labour  and  cajiital  by  means 
of  ])ermanent  investment.  A  reaction  upwards  is  thus  in- 
evitable before  long.     AVe  should  be  surer  of  the  immediate 

D  2 


3G  TRADE    DEPKESSION    AND    LOAV    PRICES. 

future  if  wages  had  fallen  more  than  they  have  done — if,  in 
other  words,  the  adjustment  of  money  wages  to  the  lower 
prices  of  commodities  had  been  more  complete  in  all  directions 
than  it  has  been.  It  is  difficult,  however,  to  measure  the 
precise  degree  of  adjustment  required,  and  the  signs  point 
rather  for  the  present  to  a  speedy  recovery  in  trade  than  to  a 
postponement  of  recovery  until  fresli  adjustments  have  been 
made  in  respect  of  the  wages  of  labour  and  the  means  of 
production  employed.     [1885.] 


(    37     ) 


II. 

GOLD    SUITLY;    THE    EATE   OF   DISCOUNT,  AND 

PlilCES. 

In  varicms  essays  which  I  have  written  on  such  questions 
as  "  The  fall  of  I'rices  of  Commodities  in  Eecent  years,"  *  and 
"  Trade  Depression  and  Low  Prices,"  f  I  have  assumed  that 
variations  in  the  amount  of  the  new  gold  supply  from  the 
mines  are  likely  to  influence  materially  the  rate  of  discount, 
or,  to  speak  more  generally,  the  rate  of  interest  in  the  short 
loan  market  of  an  industrial  system  like  that  of  England.  I 
have  also  assumed  that  this  annual  supply,  and  its  proportion 
to  the  stock  of  the  metal  in  circulation,  in  connection  witli 
the  ordinary  and  extraordinary  demands  upon  that  stock, 
are  material  factors  in  any  question  of  the  level  of  general 
piices  for  commodities  at  a  given  time,  and  of  alterations  in 
tliat  level.  The  connection  between  the  annual  gold  supply 
and  the  rate  of  discount  and  prices,  has  indeed  always 
appeared  to  me  self-evident.  As  regards  the  rate  of  discount, 
the  governing  facts  are  that  a  banker  requires  to  keep  a 
certain  reserve  of  cash  in  proportion  to  his  deposits,  and  the 
rate  of  discount  is  determined  in  part  by  that  reserve,  while 
the  replenishment  of  that  reserve  is  in  turn  dependent, 
among  other  things,  on  the  annual  supply  of  gold  from 
the  mines.  Clearly,  then,  the  rate  of  discount  nnist  be 
dependent   in   some   degree   on    that   annual   supply.      As 

*  See  "  Essays  in  Finance,"  p.  311 ;  </.  do.  "  The  Depreciation  of 
Gold  since  1848,"  p.  82.  t  See  t]}e  preceding  Essay. 


38      GOLD    supply;     the    EATE    of    discount,    and    PFxICES. 

regards  prices,  again,  it  seems  almost  too  plain  for  argument 
that  as  prices  are  the  expression  of  a  relation  of  quantity 
between  commodities  and  gold,  anything  that  changes  either 
the  amount  of  commodities  or  the  amount  of  gold,  "  other 
things  being  equal,"  must  affect  them.  Other  causes  besides 
mere  amounts  on  one  side  or  the  other  no  doubt  affect  prices, 
and  in  the  complexity  of  economic  facts,  the  operations  of  a 
particular  cause  at  a  particular  time  may  be  difficult  to 
trace ;  but  the  connection  between  quantities  of  commodities 
on  one  side  and  the  quantity  of  gold  on  the  other,  and  there- 
fore the  importance  of  any  change  in  the  demand  for  or 
supjDly  of  gold,  consequently  of  any  change  in  the  supply  of 
gold  from  the  mines,  appears  altogether  to  be  so  plain  as  to  be 
beyond  dispute.  I  find,  however,  that  propositions  I  believed 
to  be  axiomatic  or  almost  self-evident  are  in  fact  disputed. 
It  is  contended  that  what  settles  the  rate  of  discount  is  the 
relation  between  capital  seeking  employment  on  loan  and  the 
demand  for  accommodation  by  borrowers.  The  argument  that 
the  quantity  of  cash  at  a  given  time  has  anything  to  do 
with  it  is  stigmatised  as  absurd  and  as  a  revival  of  the 
mercantile  theory.  It  is  also  gravely  contended  that  the 
(quantity  of  cash  has  nothing  to  do  with  prices — that  prices 
vary  from  a  hundred  causes,  such  as  changes  of  credit,  over- 
supply  of  special  groups  of  articles,  and  the  like,  and  that 
there  is  no  room  for  such  a  cause  as  changes  in  the  supply  of 
gold  or  the  demand  for  it,  consequently  no  room  for  such 
a  cause  as  a  change  in  the  supply  of  gold  from  the  mines. 

I  propose  in  the  present  essay,  therefore,  to  set  out  the 
reasons  for  the  special  importance  of  the  suj)ply  of  gold  from 
the  mines,  in  connection  with  the  two  questions  stated,  viz., 
the  rate  of  discount  and  the  level  of  general  prices.  As  we 
shall  see,  the  two  (piestions  are  connected  at  some  points.  A 
change  in  tlie  level  of  prices  affects  the  money  market.  A 
rise  tends  to  make  "  money  "  in  demand  and  to  raise  discount 


GOLD  supply;   the  rate  of  discount,  and  prices.    39 

rates  ;  a  fall  to  make  "  money"  abundant  and  to  lower  rat^.s. 
At  the  same  time  a  change  in  the  discount  rates  acts  on 
prices.  A  rise  tends  to  lower  prices ;  a  fall  to  raise  them. 
Prices  in  turn  react  on  discount  rates.  There  is  incessant 
action  antl  reaction.  An  exposition  of  tlie  circumstances 
and  degree  in  which  these  causes  operate  or  are  modified  by 
other  causes,  will  accordingly  throw  light  on  the  general 
problems  of  the  money  market.  The  question  is  not  merely 
one  of  the  truth  or  falsity  of  the  alcove  general  assumptions, 
but  of  the  "  how  "  and  "  wherefore  "  of  their  truth,  the  "  how  " 
and  "  wherefore  "  being  in  fact  as  interesting,  if  not  more 
interesting,  than  the  assumptions  themselves.  I  propose,  in 
addition,  to  re-examine  the  facts  as  to  the  present  gold  scarcity 
and  see  whether  they  are  such  as  the  exposition  of  the  general 
question  would  lead  us  to  anticipate.  Is  the  present  state  of 
the  money  market  and  prices  to  be  explained  in  part  by  an 
actual  diminution  of  the  gold  production,  and  an  increase 
of  the  extraordinary  demands  upon  gold  in  recent  years  ?  * 


I.— THE  CONNECTION  EXPLAINED. 

In  a  simple  industrial  system,  a  system  that  is  without  paper 
circulation,  without  deposit  banks,  without  organised  markets, 
and  without  an  extended  credit  system,  the  questions 
would  hardly  arise.  There  is  a  familiar  explanation  as  to 
how  gold  is  directly  distributed  from  the  mines  to  other 
countries.  Gold  mining  being  the  profitable  pursuit  in 
mining  countries,  the  price  of  everything  except  gold 
is  raised   to   a  point  there  which  will  attract  those  other 

*  In  the  present  Essay  I  speak  of  gold  only.  Mutath  Diufandis,  of 
course,  -what  is  said  of  gold  would  be  true  of  any  other  metal  used  as 
money. 


40       GOLD    supply;     the   PiATE    OF    DISCOUNT,    AND    PRICES. 

tliinus  from  abroad.  The  attraction  from  abroad  tends  to 
raise  prices  in  tlie  countries  more  immediately  connected 
with  the  gold  mining  countries ;  and  so,  by  a  succession  of 
M'aves,  if  there  is  an  excessive  new  supply  of  gold,  general 
prices  are  raised  throughout  tlie  world.  The  difference  of 
jjiice  is  the  distributing  agency,  and  the  annual  supply  of 
gold  is  thus  directly  connected  with  prices.  Clearly,  if  a 
certain  annual  supply  is  required,  as  ex  hijpothcsi  it  must  be, 
tu  keep  pace  with  an  increase  of  population  and  commodities, 
and  so  maintain  prices  in  equilibrium,  then  a  mere  failure  to 
maintain  such  supply  will  lower  prices  and  an  excess  of 
supply  raise  them.  The  relation  is  instant  and  immediate, 
while  variations  in  the  cost  of  production,  by  diminishing  the 
supply  when  cost  increased,  and  increasing  it  when  cost 
diminished,  would  also  be  felt  very  quickly.  In  the  same 
way,  though  the  point  has  not  been  explained  that  I  know 
of,  a  direct  connection  between  the  annual  supply  of  gold  and 
the  rate  of  discount,  or  rather  the  rate  for  loans  generally, 
can  be  understood.  In  simple  industrial  systems,  the 
amount  of  cash  kept  by  capitalists  is  an  unusually  important 
item  of  that  ])ortion  of  capital  known  as  circulating  capital. 
It  is  out  of  this  cash  that  loans  are  made,  and  when  once 
parted  with,  the  amount  only  returns  slowly  and  by  round- 
about channels  to  the  capitalist.  Its  abundance  or  scarcity 
thus  affects  directly  the  power  of  the  capitalist  to  lend  and 
the  desire  of  others  to  borrow.  In  primitive  societies,  in  fact, 
it  is  cash  that  is  often  borrowed  and  lent  lor  the  direct 
])urposes  for  which  cash  is  required,  and  not  merely  as  the 
instrument  of  other  operations,  so  that  cash  in  the  strictest 
sense  of  the  word  is  capital.*     In  such  communities,  how- 

*  E.g.  A  nobleman  wastes  liis  property  in  riotous  living  and  ex- 
changes fixed  property  for  cash.  Or  a  king  wants  cash  for  a  military 
operation. 


GOLD  supply;   the  rate  of  discount,  and  prices.     41 

ever,  capital  is  usually  scarce  and  dear,  and  the  effect  of  the 
gold  supply  on  prices  is  so  important  as  to  uljscure  the  eflect 
of  the  same  supply  on  the  terms  for  loans.  That  there  must 
be  a  direct  effect,  however,  though  relatively  unimportant,  is 
clear.  A  scarcity  of  circulating  capital  is  usually  in  fact  a 
scarcity  of  cash — cash  l)eing  so  ini])ortant  an  item  of  the 
circulating  capital  which  is  borrowed  and  lent.  The  prices 
and  the  rates  for  loans  are  not,  however,  closely  inter-con- 
nected in  such  a  system.  There  is  no  action  and  reacti(jn 
between  them.  The  effects  on  them  proceed  directly  from 
the  same  causes  of  scarcity  or  abundance. 

In  a  complex  industrial  system,  however,  the  connections 
which  are  so  direct  in  a  simple  system  are  in  some  respects 
fundamentally  altered  and  are  altogether  more  difficult  to 
follow  out.  The  use  of  cash  is  economised  in  thousands  of 
ways,  and  at  the  very  time  that  its  existence  is  almost  hidden 
out  of  sight  its  potency  is  increased.  First  come  bills  of 
exchange,  which  are  at  once  certificates  of  debt,  and  substi- 
tutes for  cash.  By  means  of  these,  remittances  from  place  to 
place  become  possible  without  cash.  Debts  are  exchanged 
and  balanced  by  bankers  and  bill  discounters  and  cash  is 
economised.  Next  come  issues  of  notes,  whether  by  bankers 
or  the  State,  which  are  also  at  the  same  time  certificates  of 
debt  and  substitutes  for  cash.  Here  again,  whether  the 
paper  is  convertible  or  inconvertible,  cash  is  economised. 
The  issuer  keeps  in  cash  in  his  till  only  a  part  of  the  nominal 
value  that  he  issues,  saving  usually  half  or  two-thinls  of  the 
amount.  £50  or  £30  in  cash  thus  comes  to  do  the  wor]< 
which  £100  formerly  did,  and  probably  even  more  than  tliat 
work,  because  paper  circulates  much  more  easily  than  gold  or 
silver,  and  the  same  nominal  amount  in  paper  is  consequently 
more  se^^'iceable  in  settling  transactions  than  it  is  in  gold. 
In  a  great  market,  for  instance,  merchants  and   dealers  can 


42     GOLD  supply;   the  rate  of  discount,  and  prices. 

cany  with  tlieiii  hundreds  and  thousands  in  paper,  Avhich,  if 
they  had  to  carry  the  same  amount  in  metal,  would  require 
the  services  of  a  numerous  staff  with  much  increase  of  risk. 
Where  a  bank  is  the  issuer,  the  money  economised  is  also 
lent,  and  prices  and  rates  for  loans  are  directly  influenced  in 
that   way.     The   next   advance   in   the    complexity   of  the 
system,  viz.,  the  introduction  of  hanks  and  banking  deposits 
and   the   cheque   system,    still  more   economises   cash   and 
increases  its  subtle  potency ;  no  one  now  keeps  spare  cash  at 
all,  except  what  the  l^anker  keeps  in  case  of  accidents.     At 
this  stage  also  the  economy  of  capital  as  well  as  of  cash  be- 
comes important ;  by  the  agency  of  the  banks  mainly,  capital  is 
kept  circulating — no  one  wanting  to  borrow,  who  has  decent 
security  to  offer  whether  property  or  credit,  need  go  without. 
The  amount  of  such  circulating  capital,  represented  by  loans 
of  banks  and  deposits  with  them,  may  xary  from  day  to 
day;  Ijut  the  adjustment  is  instantaneous.     The  institution 
of  organised   markets,   and   especially   of  the   markets   for 
securities,   increases   the    complexity.     Transactions   in   the 
market  are  now  cleared  directly  ;    classes   of  intermediary 
dealers  or  speculators  are  introduced ;  the  facilities  are  now- 
such  that  any  one  wdth  fixed  capital  can  command  circulating 
capital  at  any  moment^ — he  can  either  borrow  upon  it  from 
his  bankers,  or  sell  it  on  the  Stock  Exchange  to  a  dealer  who 
\vill  borrow  from  a  banker  if  there  is  no  immediate  purchaser. 
In  turn,  those  who  have  circulating  capital  can  either  invest 
directly  in  fixed  capital  l)y  purchasing  on  the  Stock  Exchange, 
or  indirectly  by  depositing  with  a  banker.     Capital  as  well  as 
cash  is  thus  economised.     The  final  result  is  that  the  strength 
and  elasticity  of  the  modern  industrial  system  are  such  that 
the   greatest   changes   may   occur    unperceived.     Enormous 
payments  are  made  and  enormous  operations  are  carried  out 
daily  to  wliich  tlie  available  cash  would  be  a  mere  bagatelle. 


GOLD  supply;   the  rate  of  discount,  and  prices.     43 

Sucli  is  llic  gi^'iieval  cliaracter  of  a  coin[)k'x  industrial 
system  as  compared  with  a  simple  one.  See,  then,  what 
changes  are  made,  as  regards  the  element  of  cash.  Clearl}-, 
in  the  first  jdace  it  l)ecomes  a  <|uite  insignificant  item  in  the 
aggregate  of  circulating  capital.  Taper  and  cheques  passing 
instead  of  money,  the  result  is  that  in  a  country  like  England 
the  daily  payments  in  settling  balances  of  transactions  which 
are  themselves  enormously  greater,  probably  amount  to  a  very 
large  proportion  of  the  cash  actually  in  use.  The  clearings 
of  the  Bankers'  Clearing  House  alone  in  England,  which 
undoubtedly  are  only  a  part  of  the  total  payments  throughout 
the  country,  exceed  6000  millions  sterling  per  annum,  or 
20  millions  per  working  day.  Estimates  which  have  been 
made  of  the  total  property  of  the  country,  at  current  market 
rates,  place  it  at  about  9000  millions  sterling,  and  the  cash, 
whether  gold  or  silver,  being  certainly  under  200  millions,  its 
proportion  to  the  total  property  comes  out  at  about  2  per 
cent.  The  circulating  capital  is  no  doubt  much  less  than  the 
total  property  of  the  country ;  but  it  must  still  be  enormous 
as  compared  with  the  200  millions  of  cash — probably  not  less 
than  five  or  six  times  that  amount.  This  last  point  is  also  of 
less  importance  in  a  complex  industrial  system  than  in  a 
simple  one,  because  of  the  facility  already  referred  tu  liy 
which  the  individual  possessing  capital  in  any  form  can 
obtain  command  of  any  other  form,  so  that  any  part  of  tlic 
property  uf  a  country  is  now  capable  of  being  "circulated." 
Hence  it  is  that  in  the  complex  system  the  distinction 
between  cash  and  capital  becomes  so  clear,  and  people  can 
speak  of  the  rate  for  money  in  the  sense  of  "monieil 
capital  "  or  "  circulating  capital  "  as  being  in  no  way  relatctl 
to  or  dependent  on  the  amount  of  money,  that  is  of  actual 
€ash,  itself.  Money,  as  an  item  of  circulating  capital,  has 
become  quite  insignificant,  if  indeed  it  may  not  lie  altogether 


44      GOLD    supply;     the    KATE    OF   DISCOUNT,    AND    PRICES. 

disregarded,  as  far  as  borrowing  and  lending  operations  are 
concerned.  In  general  in  the  modern  system,  with  the  vital 
exception  to  be  presently  noticed,  cash  is  so  exclusively  used 
in  circulating  commodities  in  a  retail  form,  that  is,  as  small 
change,  that  it  could  not  be  used  for  general  purposes  as 
circulating  capital. 

The  exception  referred  to  is  a  cardinal  one.  A  special 
and  peculiar  use  for  cash  is  found  in  the  complex  system  in 
the  shape  of  banking  reserves.*  The  cash  reserve  of  a  banker 
is  the  condition  of  his  solvency.  Theoretically,  banking  is  an 
impossibility.  If  all  depositors  and  note-holders  wanted  their 
Ciish  at  once,  they  could  not  be  paid.  What  a  banker  must 
do  then  in  respect  of  cash  is  (1)  to  keep  enough  for  current 
demands — till-money  as  it  is  called ;  and  (2)  in  addition,  a 
reserve  for  extraordinary  demands,  for  emergencies.  Other-, 
wise  he  is  not  only  in  danger  of  bankruptcy,  but  imless  his 
casli  is  sufficient,  bankruptcy  is  a  mathematical  certainty, 
nothing  is  so  certain  as  the  unforeseen.  There  must  be 
extraordinary  demands,  and  a  banker  must  meet  them. 
Hence  in  the  complex  system,  as  in  the  simple  one,  actual 
cash  has  a  vital  part  to  }tlay.  It  sets  a  limit  to  a  banker's 
liabilities ;  in  other  words  to  his  loans  and  investments, 
which  are  the  condition  of  his  ability  to  receive  deposits.  He 
must  either  keep  these  deposits  in  cash,  or  use  a  limited  and 
defined  part  of  them  in  investments  and  loans  such  as 
experience  shows  he  may  safely  use.  He  cannot  exceed  the 
])roportion. 

The  limitation  has  also  the  effect,  as  regards  the  aggregate 

*  The  substance  of  the  next  few  pages,-  it  will  be  observed,  exhibits 
the  view  of  the  subject  to  he  found  in  Mr.  Bagohot's  '  Lombard  Street.' 
It  is  necessary,  however,  for  the  purpose  of  clearness  to  repeat  the 
theory  in  however  condensed  a  form.  See  also  a  subsequent  Essay 
in  the  present  series  on  "  Bank  Reserves,"  where  the  subject  is  dis- 
cussed practically. 


GOLD    SUPPLY ;     THE    RATE    OF    DISCOUNT,    AND    PRICES.       45 

of  the  couiitrv,  that  the  noininal  ca])it!il  civciilatcid  1»>-  liaii]<,s 
<^annot  exceed  a  certain  proportion  to  tlie  aggregate  cash 
reserve.  As  the  business  of  a  country  re([uires,  in  the 
complex  system,  that  a  certain  portion  oi"  its  property  should 
be  "circulated"  by  banks— that  is,  should  be  represented  l-y 
the  bank's  deposits  on  the  one  side,  and  its  assets,  whether  of 
€ash  or  securities,  on  the  other,  then  the  nominal  value  of  that 
X)ortion  cannot  exceed  a  certain  proportion  to  the  bankini; 
reserve.  The  amount  of  this  last  proportion  may  vary,  and 
does  vary,  within  very  wide  limits.  The  means  of  replenish- 
ing the  reserve  at  will  are  in  fact  as  important  to  a  banker  as 
the  reserve  itself ;  the  potential  as  well  as  the  actual  reserve 
must  be  considered.  But  the  limitation  is  always  there.  The 
cash  held  by  the  banks  in  reserve,  making  all  allowance,  of 
course,  for  the  instruments  at  their  command  for  replenishing 
it,  fixes  an  absolute  and  impassable  limit  to  expansion. 

In  our  English  l)anking  system  there  is  an  additional 
refinement,  in  consequence  of  the  existence  of  a  banking 
hierarchy  which  dominates  not  only  the  banks  of  the  Xrnited 
Kingdom,  but  has  many  foreign  connections.  Provincial  and 
some  foreign  banks  bank  with  London  agency  1  )anks — usually 
the  leading  Joint  Stock  and  private  banks ;  these  in  turn 
have  deposits  with  the  discount  houses  and  1)111-1  )rokers,  and 
with  the  Bank  of  England;  and  the  discount  houses  and 
bill-brokers  in  turn  also  deposit  with  the  Bank  of  England. 
One  bank  leans  on  another,  and  so  it  comes  about  that 
substantially  the  main  banking  reserve  of  the  English  bank- 
ing system  is  kept  by  the  Bank  of  England  only,  i'.ut 
refined  and  complicated  as  the  system  may  be,  there  must  be 
cash  somewhere,  which  sets  an  impassable  limit  to  the  mass  ot 
transactions  based  upon  it,  and  particularly  to  the  amount  of 
nominal  capital  that  may  be  circulated  by  banks ;  and  conse- 
quently, as   we   shall   see,  to  the  wliole  amount  of  iiuniinal 


•4G     GOLD  supply;   the  PvAte  of  discount,  and  prices. 

property  in  a  community  at  a  given  time.  Like  a  small 
weight  on  the  long  arm  of  a  lever,  the  cash  reserve  of  a 
banking  system  has  enormous  force. 

In  the  complex  system  also  the  use  of  cash  as  small 
change  becomes  specially  important,  and  the  requirements  of 
cash  for  tliat  purpose  are  undoubtedly  associated  with  the 
range  of  wages  and  prices,  while  they  necessarily  act  con- 
stantly on  the  banker's  reser^'e.  A  certain  level  for  wages  and 
prices  implies  the  use  by  a  community  at  a  given  time  of  a 
corresponding  amount  per  head  of  notes  and  of  cash  of  different 
kinds.  If  wages  and  prices  rise  from  that  level,  more  notes 
and  cash,  "  other  things  being  ecpial,"  are  required.  If  wages 
and  prices  fall  below  that  level,  "  other  things  being  equal,"  the 
cash  requirements  are  diminished.  This  fact  may  be  asserted 
here  as  one  of  obvious  necessity  and  of  common  knowledge. 
If  a  particular  district  becomes  prosperous,  cash  is  attracted 
to  it  for  small  change.  At  certain  seasons  of  the  year, 
particularly  in  the  tourist  season,  and  at  har^•est  time,  more 
cash  is  required  for  people's  pockets  than  at  other  periods  of 
the  year,  and  more  is  wanted  when  trade  is  brisk,  that  is 
when  wages  are  good  and  prices  rising,  than  when  it  is  slack. 
There  is  thus  a  constant  play  even  in  tlie  complex  system, 
between  the  amount  of  cash  on  the  one  side,  and  values  on 
the  other.  Prices  and  wages  cause  a  demand  fur  cash  as 
small  change,  and  are  necessarily  limited  by  the  amount  of 
cash  available.  According  as  they  permit  an  addition  to 
l)anking  reserves  or  tend  to  cause  a  deduction  from  them,  they 
must  also  be  related  to  the  expression  of  all  nominal  values, 
these  values  being  themselves  dependent,  as  we  have  asserted, 
on  the  amount  of  the  banking  reserve  itself. 

The  question  remains  as  to  the  precise  way  actual  cash 
is  related  to  changes  in  prices  and  in  the  rate  of  discount 
in  a  country   where  the  industrial  system  is  complex.     To 


*      GOLD    SUPPLY  ;     THE    KATE    OF    DISCOUNT,    AND    PRICES.      47 

take  first  the  rate  oi'  discuuiit.  It  is  ([uite  true  of  course 
tliiit  mainly  aiul  ])riniarily  tliat  rate  depends  on  the  relation 
between  lenders  and  borrowers,  on  the  amount  of"  ca])ital 
offerin*;-  on  the  one  side,  and  the  amount  in  demand  by 
effective  liorrowers  on  the  other  side.  The  complex  system, 
by  making  it  clear  that  cash  is  quite  insir^nificant  in  amount 
compared  with  the  whole  capital  of  a  country,  is  so  small  in 
fact,  that  it  may  be  neglected  altogether  in  such  a  question  as 
far  as  an}'  direct  influence  is  concerned,  also  places  it  beyond 
doubt  that  it  is  not  by  there  being  an  increase  or  a  diminution 
of  capital  directly  that  changes  in  the  amount  of  cash  can 
affect  the  rate  of  discount.  The  reason  why  cash  affects  the 
rate  of  discount  is  through  its  force  being  applied  to  the  long 
arm  of  the  lever  to  which  w^e  have  already  referred.  The 
banking  reserve  affects  the  rate  of  discount,  and  is  in  turn 
affected  by  it  in  various  ways.  In  the  long  run,  and  on  the 
average,  matters  are  settled  by  the  relation  of  the  supply  of 
capital  and  the  demand ;  but  minor  fluctuations  must  be 
settled  by  the  varying  relations  of  the  cash  reserve  to  the 
liabilities  of  the  banks,  and  through  them  to  the  nominal 
capital  of  the  country.  Transitions  from  one  normal  level  to 
another  may  also  be  assisted  or  retarded  by  the  relations  of 
cash  reserve  to  banking  liabilities. 

Tlie  two  points  to  be  borne  in  mind  in  tliis  connection 
are  (1)  That  the  affairs  of  a  complex  industrial  community 
are  seldom  in  equililtrium,  and  that  while  adjustments  within 
wide  limits  in  prices  and  values  can  be  made  ^^^thout  dis- 
turbance, yet  there  is  constant  action  and  reaction ;  and  (2) 
That  the  rate  of  discount  in  the  short  loan  market  of  a 
banking  centre  like  London  is  not  to  be  identified  witli 
the  rate  for  loans  generally — it  is  only  the  rate  for 
special  loans  between  special  classes  of  borrowers  and 
lenders,  affected,  no  doubt,  by  the  general  rates  obtainable 


48     GOLD  supply;    the  rate  of  discount,  and  prices.    - 

for  loans  and  investments  in  the  country,  but  nevertheless  a 
thing  sui  generis,  and  in  which  there  may  be  great  changes 
without  corresponding  changes  jn  the  general  borrowing 
rates.  The  broad  proposition  is  that  in  the  constant  shiftings 
and  changes  incidental  to  the  complex  industrial  system,  the 
short  loan  market  is  necessarily  affected  in  a  special  way — is 
acted  on  liy,  and  reacts  on  other  changes. 

To  begin  with  matters  far  enough  away  at  first  sight  from 
anything  directly  connected  with  the  short  loan  market.  It 
is  quite  plain  of  course  that  there  may  be  changes  in  the 
proportions  of  "  long  "  and  "  short "  money  at  different  times. 
Lenders  may  change  their  minds  and  desire  to  lend  their 
money  for  long  instead  of  short  periods  and  rice  versa ;  while 
borrowers  may  change  in  like  manner.  The  short  loan 
market  is  a  wonderful  piece  of  mechanism  ;  the  steadiness  of 
the  proportion  of  short  money  to  the  demands  for  it,  though 
lenders  and  l^orrowers  are  continually  changing,  is  not  far 
short  of  a  marvel ;  but  the  steadiness  is  only  comparative, 
and  there  are  constant  changes  within  limits.  Probably 
each  variation  in  the  rate  makes  alterations  in  the  propor- 
tions of  long  money  and  short.  Equally  there  may  be 
changes  in  the  amount  of  capital  for  investment  and  for  loan. 
So  also  there  may  be  great  changes  arising  from  the  destruc- 
tion of  capital  on  the  one  side  or  the  other,  or — what  is 
equally  important  for  the  present  purpose — from  the  dimi- 
nution of  nominal  capital  through  such  an  influence  as  a  fall 
in  prices  or  from  its  increase  through  a  rise  in  prices.  There 
is  at  no  time  an  equilibrium,  and  every  change  tells  on  tlie 
sensitive  short  loan  market.  A  change  in  the  state  of  credit, 
af^ain,  affecting  either  the  eagerness  of  borrowers  to  borrow 
or  of  capitalists  to  lend,  may  disturb  the  equilibrium.  This 
last  change  I  desire  specially  to  notice  because  of  its  indirect, 
as  well  as  its  direct,  consequences.     An  increase  of  lending 


GOLD    supply;     the    KATE    OF   DISCOUNT,    AND    PRICES.      49 

from  whatever  cause,  especially  in  the  short  loan  market, 
tends  to  raise  prices.  Borrowers  borrow  in  order  to  purchase 
or  to  avoid  selling.  Hence  prices  rise,  and  the  rise  of  prices 
adds  to  the  nominal  capital,  and  particularly  to  the  nominal 
capital  represented  by  the  loans  and  deposits  of  banks. 
Wages  in  turn  rise,  and  with  their  rise,  as  we  have  seen, 
requirements  for  small  change  are  increased,  and  the  banking 
reserve  trenched  upon.  A  diminution  of  borrowing  has  pre- 
cisely the  opposite  effect.  Thus  when  there  is  borrowing,  a 
bank's  liabilities  are  increased  at  the  very  time  that  a  cause 
is  in  operation  tending  to  diminish  the  reserve ;  and  when 
borrowing  diminishes,  banking  liabilities  also  diminish  and 
the  reserve  tends  to  increase.  To  go  one  step  further.  The 
one  instrument  a  banker  possesses  to  check  borrowing  when 
his  liabilities  increase  and  his  reserve  diminishes,  so  that 
there  is  or  threatens  to  be  a  want  of  the  requisite  proportion 
between  them,  is  to  raise  his  rate  of  discount,  that  is,  the  rate 
in  the  short  loan  market.  He  might,  of  course,  refuse  to  lend 
while  not  raising  his  rate,  but  while  in  this  manner  he  could 
restore  the  equilibrium  by  the  one  process  of  diminishing  or 
not  increasing  his  liabilities,  he  would  of  course  do  nothing 
towards  increasing  his  reserve,  which  he  eftects  in  part  by 
himself  becoming  a  borrower.  Eaising  his  own  rate  to  bor- 
rowers, which  of  course  means  on  his  part  a  larger  offer  to 
depositors,  is  thus  a  banker's  instrument  for  restoring  equili- 
brium. Improved  credit  and  borrowing  necessarily  implies 
a  relati\'ely  diminishing  reserve  and  increasing  rates  of  dis- 
count, checking  in  turn  the  rise  of  prices  which  the  borrowing 
has  produced.  In  turn,  as  his  loans  are  paid  off  and  his  liabili- 
ties diminish,  a  banker's  reserve  increases  relatively,  if  not 
absolutely,  while  competition  ensures  that  rates  of  discount 
fall.  This  last  process  on  a  great  scale  also  implies  falling 
prices  and  wages. 
ir.  E 


50      GOLD    supply;     the   KATE    OF    DISCOUNT,    AND    PEICES. 

In  all  these  various  ways,  therefore,  the  rate  of  discount 
varies  with  the  varying  changes  in  capital  and  credit,  which 
at  least  affect  the  amount  and  proportion  of  the  banking 
reserve  if  they  are  not  affected  by  it.   But  clearly,  the  changes 
in  the  bank  reserve,  arising  from  whatever  cause,  must  be 
as  material  as  those  changes  which  are  associated  with  changes 
of  credit.     If  at  a  given  moment  the  reserve  of  the  Bank  of 
England  were  to  be  suddenly  reduced  one  half  by  an  external 
cause— the  whim  of  a  great  millionaire,  or  the  mistaken  policy 
of  the  ministers  of  any  great  country,  any  of  whom  would 
have  power  to  lock  up  such  an  amount  of  cash,  every  one 
would  see  that  a  condition  of  most  unstable  equilibrium  would 
be  produced.    The  banks  would  at  once  be  compelled  to  raise 
their  rates  of  discount,  which  would  raise  rates  all  round, 
although  in  the  English  system  the  reserve  bank  itself  does 
not  usually  take  money  on  deposit  at  interest.     Equilibrium 
would  have  to  be  restored  by  the  whole  banks  of  the  country 
reducing  their  liabilities  on  one  side  and  increasing  their  cash 
on  the  other.     Similarly  an  influx  of  cash  into  the  banks 
would  compel  a  lowering  of  rates  until  borrowing  began  again, 
and  prices  and  wages  rose.     The  reserve,  in  fact,  may  be  con- 
sidered to  be  specially  effective  in  causing  changes  in  the 
short  loan  market.     The  very  fact  of  the  usual  completeness 
of  the   adjustment   between    borrowing    and   lending,   and 
between  the  different  kinds  of  borrowing  and  lending,  makes 
the  existence  of  a  small  surplus  in  the  banking  reserve  above 
the  usual   amount   excessively   potent.     If  £20,000,000   of 
"normal"  reserve  supports  a  circulation  of  capital  in  the 
short  loan  market  of  perhaps  £1,000,000,000,  then  an  addition 
of  £10,000,000  would  require  for  the  complete  re-establish- 
ment of  the  former  equilibrium  between  reserve  and  deposits 
an  addition  of  £500,000,000  to  the  circulating  capital— to  the 
banking  deposits  on  the  one  side  and  the  securities  on  the 


GOLD    supply;     the    PvATE    of   discount,    AND    PRICES.       51 

other ;  while  the  rise  in  wages  and  prices  involved  in  such  a 
change  would  necessitate  in  turn  an  addition  of  a  large  amount 
to  the  cash  in  circulation  as  small  change.  AVhat  appears  to 
happen  is  that  when  cash  is  added  to  the  banking  reserve  it 
acts  at  first  on  the  rate  of  discount,  and  tends  to  produce  the 
addition  required  to  the  circulating  capital  of  the  country ; 
but  the  supply  of  cash  for  small  change  being  only  obtainable 
from  the  banking  reserve,  the  reserve  in  turn  is  trenched 
upon,  and  the  addition  to  the  bank's  liabilities  is  checked. 
In  the  English  system  of  banking  the  effect  of  any  extra 
supply  of  cash  in  the  short  loan  market  is  usually  very  quick. 
The  pressure  to  find  borrowers  develops  every  sort  of  opera- 
tion by  which  nominal  capital  is  increased,  and  prices  and 
wages  rise.  At  times  when  there  is  unusual  discredit  the 
operation  is  slower,  but  it  is  surprising  with  what  rapidity 
the  surplus  ordinarily  acts. 

The  addition  of  this  surplus,  it  should  be  understood,  has 
an  effect  which  no  addition  of  any  other  species  of  circu- 
lating capital  to  the  resources  of  the  money  market  can  have. 
The  latter  can  only  act,  in  fact,  in  proportion  to  its  relation  to 
the  whole  circulating  capital  of  a  country.  The  cash,  as  we 
liave  seen,  acts  in  quite  a  special  way  through  the  banking 
reserve.  It  is  sometimes  argued  indeed  that  any  kind  of 
circulating  capital  brought  into  the  country  adds  to  the 
resources  of  the  money  market  just  as  gold  does.  A  mer- 
chant, it  is  said,  brings  home  a  cargo  of  wheat,  sells  it,  and 
obtains  a  credit  with  his  bankers  for  the  amount  realised.  A 
merchant  importing  bullion  does  no  more ;  he  gets  a  credit 
with  his  banker  for  the  amount.  But  the  essential  difference 
is  that  the  seller  of  the  wheat  only  deposits  with  the  banker 
M'hat  the  banker  has  already  had :  the  banker  owes  the 
amount  to  A.  instead  of  to  B. ;  if  there  is  any  addition  to  the 
banker's  liabilities  through  the  operation,  it  is  because  he  or 

■    E  2 


52      GOLD    supply;     the    KATE    OF    DISCOUNT,    AND    PRICES. 

some  other  banker  has  previously  lent  to  B.,  and  in  any  case 
there  is  no  addition  to  the  general  banking  assets — to  the 
reserve.  A  succession  of  such  operations  would  inevitably 
alter  the  relation  of  the  banker's  liabilities  to  liis  cash,  so  as 
to  compel  him  to  raise  his  rate  of  discount.  The  importer  of 
the  Ijullion,  however,  deposits  with  the  banker  something 
wliich  he  did  not  have  before — a  surplus  which  may  be  the 
support  of  a  new  series  of  advances  and  deposits,  until  the 
reserve,  as  increased,  bears  the  same  proportion  to  the  lia- 
bilities which  was  borne  by  it  before  the  increase. 

It  does  not  follow,  of  course,  from  what  has  been  said  that 
the  rate  of  discount  in  the  short  loan  market  is  regarded  as 
exclusively  dependent  on  the  amount  of  the  reserve  and  its 
proportion  to  the  liabilities.  Of  course  there  are  many  other 
circumstances  to  be  considered  by  lenders  and  borrowers. 
The  state  of  credit  and  what  it  is  likely  to  be,  estimates  of  the 
probable  movements  in  the  reserve  itself,  changes  in  the 
monetary  systems  of  connected  countries,  and  the  thousand 
and  one  accidents  to  which  business  is  liable,  will  induce  the 
banker  to  keep  or  seek  to  keep  a  different  reserve  at  one  time 
than  he  would  at  another,  and  to  vary  his  rates  of  discount 
accordingly.  Those  who  observe  the  money  market  most 
carefully  will  be  the  first  to  recognise  that  sudden  and  sharp 
changes  in  rates  are  often  quite  as  much  due  to  sudden  changes 
of  the  speculative  opinions  of  bankers  as  to  whether  it  is 
"  safe  "  for  them  to  lend  or  not,  as  to  any  other  cause.  One 
day  there  is  a  surplus  to  lend  and  next  day  there  is  not,  just 
l)ecause  somebody  has  changed  his  opinion.  Thus  there  may 
be  all  sorts  of  rates  of  discount  with  all  sorts  of  amounts  of 
reserve  and  liabilities.  But  the  reserve  and  the  changes  in  it 
are  none  the  less  material  factors.  They  are  not  everything, 
but  they  are  much. 

It  is  easy  to  see,  tlien,  how  material  an  annual  supply  of 


GOLD  supply;   the  rate  of  discount,  and  prices.     5.J 

gold  from  the  mines  may  become  in  connection  with  the  rate 
of  discount.  One  year  with  another,  other  things  bemg  equal, 
the  population  of  gold-using  countries  increases  in  numbers, 
and  commodities  arc  multiplied  in  even  greater  proportion. 
Given  the  same  range  of  prices  and  the  same  rates  of  wages 
and  money  incomes  as  before,  and  a  continuance  of  the  same 
general  conditions  of  business,  this  means  that  one  year  with 
another  a  banker's  deposits  and  liabilities  will  increase,  or 
rather  the  aggregate  deposits  and  liabilities  of  a  given  banking 
system  will  increase,  and  consequently  a  larger  and  larger 
reserve  will  be  required.  If  no  such  reserve  is  forthcoming, 
then  equilibrium  can  only  be  restored  by  a  decline  in 
nominal  values,  which  must  be  brought  about,  if  necessary, 
by  a  raising  of  the  rates  of  discount.  For  similar  reasons 
a  steady  increase  in  numbers  and  wealth,  other  things 
being  equal,  implies  a  larger  and  larger  requirement  for  cash 
as  small  change.  If  no  such  cash  is  forthcoming,  then  it  is 
quite  impossible  for  the  increased  and  richer  population  to 
effect  their  transactions.  To  effect  them  they  must  trench 
on  the  bank  reserves,  necessitating  the  same  rise  of  discount 
rates  and  fall  of  nominal  values  wliich  would  in  any  case 
become  inevitable  from  the  decline  in  the  proportion  of  the 
banking  reserve  to  liabilities.  The  two  effects  are  produced 
;pari  passu,  and  they  contribute  in  turn  to  the  same  result.  To 
maintain  equilibrium  in  tlie  complex  system,  therefore,  a 
steady  addition  to  the  stock  of  cash  is  required.  There  is 
nothing  that  is  more  essential.  Equally  of  course  equilibrium 
is  disturbed  if  more  is  added  at  any  time  than  is  required. 

It  follows  even  more  clearly  from  what  has  been  said  that 
any  sudden  extraordinary  demand  for  cash  must  have  a 
marked  effect  on  discount  rates,  and  through  them  on  prices 
in  the  way  already  described,  until  equilibrium  is  restored. 
The  connection  here  is  only  too  obvious.     Such  extraordinary 


54    GOLD  supply;   the  eate  of  discount,  and  prices. 

demands  make  a  heavy  inroad  on  banking  reserves ;  rates  of 
discount  are  raised  and  liea\ily  raised ;  sales  are  precipitated  ; 
equilibrium  is  restored  by  a  somewhat  violent  process.  What 
will  not  be  so  readily  admitted  is  tliat  similar  effects  must 
follow  a  contraction  of  the  gold  supply  of  a  less  marked  kind, 
though  they  may  be  more  difficult  to  trace.  But  like  causes 
produce  like  effects,  and  it  seems  really  unnecessary  to  argue 
the  matters  theoretically.  It  lies  in  the  very  nature  of  a 
banking  reser\'e  that  any  important  change  in  it  should 
produce  certain  effects  on  the  rate  of  discount,  and  through  it 
on  prices  and  wages  until  equihbrium  is  restored. 

To  take  next  the  question  of  prices.  It  is  apparent  from 
what  has  been  said  that  prices  are  affected  by  changes  in  the 
supply  of  gold.  That  supply  is  affected  by,  and  affects  in 
turn,  the  rate  of  discount.  An  impression  indeed  prevails  in 
the  City  that  prices  are  affected  in  no  other  way  by  the  gold 
supply.  In  our  present  complicated  banking  system,  it  is 
urged,  there  is  no  direct  connection  between  gold  coinage 
and  commodities ;  it  is  only  through  the  discount  market 
that  prices  can  be  affected  at  all.  But  this  opinion  seems 
as  unwarranted  as  the  opinion  already  discussed — that  the 
rate  of  discount  itself  is  not  in  any  way  connected  with 
the  gold  supply.  Prices  may  be,  and  must  be,  affected 
directly,  and  the  effect  on  prices  of  discount  rates  is  itself 
restricted  to  certain  limits. 

The  point  to  consider  about  prices  is  that  every  price 
represents  two  tilings — 1.  (what  every  one  sees)  the  price  of 
a  particular  commodity  in  gold,  and  (2)  what  is  not  so  appa- 
rent, the  relation  of  that  other  commodity  to  commodities 
and  things  in  general.  The  producer  looks  to  the  gold  price, 
but  the  value  to  him  of  the  gold  price  is  what  that  price  will 
fetch.  Hence  there  is  an  incessant  adjustment  going  on 
between  wages  and  incomes  of  every  kind,  and  prices.     A 


GOLD   supply;     the    KATE    OF   DISCOUNT,    AND    PRICES.       55 

producer,  unless  he  obtains  a  certain  money  price  on  tlie 
average,  will  cease  to  produce ;  he  will  go  into  something 
else.  Ultimately  it  comes  to  this,  that,  unless  capitalists 
and  wage  earners  engaged  in  a  certain  production  obtain  a 
sufficient  money  price  to  give  them  the  command  they  desire 
and  are  able  to  insist  upon,  over  other  things,  the  production 
will  cease  or  diminish.  The  effect  of  this  cause  on  prices 
may  only  operate  insensibly ;  all  sorts  of  fluctuations  in 
price  due  to  other  causes  may  have  to  be  allowed  for,  the 
average  being  only  arrived  at  when  long  periods  are  reckoned, 
but  it  is  a  cause  which  is  always  operating  and  which  must 
affect  average  prices.  The  money  price  in  this  view  is  mainly 
a  medium  for  adjusting  real  prices,  and  these  real  prices  are 
susceptible  of  adjustment  directly  and  need  not  be  adjusted 
exclusively  through  the  discount  market.  There  is  no  reason 
to  believe  that  an  incessant  adjustment  is  not  always 
going  on. 

The  fact  of  such  an  incessant  adjustment  also  makes  it 
possible  that  the  abundance  or  scarcity  of  gold  may  be  felt  on 
prices  in  a  large  degree  without  the  process  being  perceived 
in  the  discount  market.  Suppose  a  fall  of  prices,  due  to  over- 
production, to  take  place  in  a  large  group  of  articles  where 
in  any  case  there  is  a  scarcity  of  gold  tending  to  affect  the 
discount  market.  The  fall  p^o  tanto  relieves  the  latter 
market  from  whatever  cause  it  arises.  It  is  equivalent  to 
a  diminution  of  nominal  capital,  and  so  tends  for  the  moment 
to  relieve  the  disproportion  between  borrowing  operations  and 
the  cash  a\ailable  to  move  them.  It  is  the  same,  of  course, 
with  a  fall  of  prices  due  to  greatly  diminished  cost  of  pro- 
duction. The  fall  eases  the  money  market  and  prevents  a 
rise  in  rates  of  discount,  or  produces  a  fall  in  them,  such 
as  would  not  otherwise  have  occurred.  The  same  with  a 
rise  in  the  price  of  a  group  of  articles  occurring  when  gold  is 


56      GOLD    supply;     the    KATE    OF   DISCOUNT,    AND    PRICES. 

becommg  more  abundant.  The  rise  as  it  goes  on,  with  the 
increase  of  wages  attending  it,  absorbs  more  gold.  More 
small  change  is  wanted — and,  as  we  have  already  seen,  there 
must  be  a  steady  increase  of  banking  reserves,  if  the  con- 
ditions of  business  are  not  to  be  changed — if  equilibrium  is  to 
continue.  The  process  may  be  quite  insensible,  but  it  cannot 
but  go  on,  and  it  conceals  changes  in  the  real  prices  of  com- 
modities and  securities  relatively  to  each  other  which  are  all 
the  while  in  progress. 

To  put  the  matter  quite  shortly,  wages  and  profits  are 
directly  related  to  the  quantity  of  gold  in  use.  On  these 
wages  and  profits  depend  prices.  Changes  in  wages  and 
profits  are  also  incessantly  affecting  prices,  which  are  in  trutli 
in  the  long  run  only  wages  and  profits  in  another  form,  and 
under  cover  of  these  changes  differences  of  scarcity  and 
abundance  in  gold  may  be  adjusted  without  the  changes  in 
the  short  loan  market  coining  directly  into  play. 

The  changes  in  prices  affected  by  changes  in  the  short  loan 
market,  as  we  have  seen,  are  mainly  of  a  different  kind. 
They  are  changes  in  credit  prices.  A  time  of  good  credit 
causes  high  prices,  as  we  have  seen  ;  a  time  of  bad  credit  low 
prices.  The  change  from  the  one  to  the  other  range  is  usually 
connected  with  changes  in  the  rate  of  discount.  But  there  are 
other  changes  of  prices  constantly  going  on,  only  discernible 
when  long  intervals  are  reckoned,  and  these  are  directly 
related  to  wages  and  profits  which  are  directly  dependent  on 
scarcity  and  abundance  of  gold.  The  adjustment  in  the 
latter  case  may  be  assisted  or  prevented  by  what  goes  on  in 
the  discount  market :  the  fall  of  prices  in  a  period  of  discredit 
may  be  exaggerated  by  a  scarcity  of  gold  making  itself  felt ; 
the  rise  of  prices  in  a  period  of  good  credit  checked  by  a 
similar  cause.  But  the  cause  is  only  contributory.  There  is 
no  reason  why  the  adjustment  should  not  be  largely  direct. 


GOLD  supply;   the  rate  of  discount,  and  prices.     57 


IL— STATISTICAL  ILLUSTRATIONS. 

Such  is  tlie  general  aspect  of  the  double  question  pnt  when 
tlie  "  mathematics  "  of  it  are  carefully  examined  along  witli 
some  knowledge  of  the  actual  practice  of  bankers  and  com- 
mercial men  as  regards  borrowing  and  lending,  and  the 
keeping  of  cash  reserves.  It  is  possible,  however,  to  go 
farther  and  point  out  tliat  certain  facts  as  to  the  money 
market,  capable  of  statistical  proof,  or  which  are  otherwise 
obvious,  are  those  which  might  be  expected  if  the  theory 
were  true.  More  particularly  the  relation  between  low 
reserves  and  a  high  rate  of  discount ;  between  high  rates  of 
discount  and  falling  prices,  and  between  low  rates  of  dis- 
count and  rising  prices ;  betw^een  an  irritable  sensitive  money 
market,  and  sudden  demands  for  gold,  are  all  matters  of 
observation  as  well  as  of  theory.  In  order  to  examine  the 
facts  of  the  money  market  at  a  given  time,  statistical  illus- 
trations of  the  theory  already  set  forth  may  be  useful. 

The  first  point  I  propose  to  notice  is  the  connection  between 
higher  rates  of  discount  at  one  period  of  the  year  than  at 
another,  with  the  amounts  of  the  reserve  at  the  corresponding 
periods.  There  are  periodical  fluctuations  in  the  money 
market  according  to  the  season  of  the  year ;  reserves  on  the 
average  are  lower  at  one  period  than  another ;  and  money  is 
higher  on  the  average  when  the  reserves  are  low  than  when 
they  are  full.  As  to  the  reason  of  this  periodicity  in  the 
money  market,  I  need  not  go  into  details.  It  is  fully  de- 
scribed in  various  papers.  I  would  refer  especially  to  Mr. 
Jevons's  "  Investigations  in  Currency  and  Finance,"  where  the 
point  is  fully  discussed  in  two  papers,  one  "  On  the  Study  of 
Periodic  Commercial  Fluctuation,"  and  the  other  "  On  the 
frequent  Autumnal  Pressure  in  the  Money  Market,  and  the 


58     GOLD  supply;   the  eate  of  discount,  and  prices, 

action  of  the  Bank  of  England."  I  would  also  refer  specially 
to  Mr.  Palgrave's  notes  of  the  evidence  before  the  Banking 
Committee  of  1874,  and  his  subsequent  book,  '  Bank  Eate  in 
England,  France,  and  Germany,  1844-78.'  There  are  also 
many  discussions  in  the  '  Economist '  on  the  same  theme, 
dating  as  far  back  as  1858  or  1859.  These  papers  contain 
so  full  an  exposition  of  the  fact  of  periodicity,  and  the  causes 
of  it,  that  it  would  be  superfluous  for  me  to  go  into  them.  I 
am  only  concerned  at  present  to  note,  as  fully  proved,  that 
reserves  are  ordinarily  lower  at  some  jDeriods  of  the  year  than 
at  others,  and  chiefly  in  the  autumn  period  ;  and  that  one  of 
the  main  causes  is  believed  to  be  a  greater  business  in 
making  payments  at  one  period  than  another  owing  to  the 
reaping  of  the  harvest,  and  the  like  influences,  which  results 
in  a  drain  upon  the  central  banks  for  cash.  The  note  cir- 
culation of  such  banks  also  increases,  when  the  reserve 
diminishes,  and  for  a  similar  reason.  Assuming  this  central 
fact  to  be  proved,  what  I  propose  now  to  prove  is  the  simul- 
taneousness  of  high  rates  of  discount  wdth  the  low  reserves, 
and  to  suggest  as  beyond  dispute  to  all  reasonable  minds, 
that  this  simultaneousness  cannot  be  a  mere  coincidence,  but 
that  it  is  due  to  the  connection  between  the  reserve  and  the 
rate  of  discount,  which  has  been  previously  set  forth.  The 
banking  system  being  what  it  is,  and  everything  turning  on 
the  reserve  as  regards  a  banker's  solvency,  rates  must  be 
raised  when  the  reserve  is  low  and  vice  versa.  Possibly 
bankers  should  allow  more  than  they  do  for  merely  periodical 
fluctuations  ;  but  if  in  fact  it  is  difficult  for  bankers  to  do  so 
owing  to  the  constitution  of  human  nature,  aggravated  as  I 
believe  is  the  case  by  peculiarities  of  the  English  banking 
system,  then  a  periodic  fluctuation  in  rates  of  discount,  corre- 
sponding to  the  fluctuations  in  the  reserve,  is  inevitable. 
To  show  the  connection  in  the  most  compact  form  I  can 


GOLD  supply;   the  rate  of  discount,  and  prices.     50 

think  ol',  I  luuc  compiled  the  accompanying  short  Table  from 
Mr.  I'algrave's  very  elaborate  and  exhaustive  Tables  in  the 
books  al>ove  referred  to.  Mr.  Palgrave  in  those  Taljles 
works  out  for  a  long  series  of  years  the  average  monthly 
and  yearl}'  rate  of  discount  of  the  Bank  of  England,  and 
the  proportion  of  the  monthly  average  to  the  average  for 
the  year;  and  he  also  works  out  the  average  monthly 
and  yearly  reserve  of  the  Bank  of  England,  and  the  pro- 
portion of  the  monthly  to  the  yearly  average,  the  yearly 
average  in  the  proportion  columns  being  taken  as  equal 
to  100.  The  accompanying  Table  compares  the  results  so 
obtained,  completing  the  figures  also  from  1878  to  the 
present  time  : 

Statement  showing  the  proportion  of  the  Average  Eate  of  Discount  of 
the  Bank  of  England  in  each  month  during  the  Years  1845-84 
to  the  Average  Yearly  Eate ;  and  the  proportion  of  the  Average 
Monthly  Ecserve  to  the  Average  Yearly  Keserve:  the  Average 
for  the  Year  =  100. 


Rate  of  Discount. 

Proportional  reserve. 

Month. 

Above 
average. 

Under 
average. 

Above 
average. 

Under 
average. 

January 
Feliruary    . 
March 
April 
May  . 
June 
July  . 
August 
September  . 
October 
November  . 
December  . 

106 
lOOi 

KJ-H 
1141 
110; 

99 

96i 

931 

9k 

93* 
9iJ 

1031 
110" 

108* 
lOOi 
100 
105i 

104^ 

97i 

9\l 
941: 

92^ 

The  effect,  of  this  Table  is  (1)  that  in  the  thirty  years 
dealt   with   the  reserve   is   aboAC   the  average   of  the   year 


CO    GOLD  supply;   the  rate  of  discount,  and  prices. 

and  the  rate  of  discount  below  the  average  in  the  following 

months:  February,  July, 

March,  August, 

June,  September ; 

(2)  that  in  the  same  period  the  reserve  is  below  the  average 
of  the  year,  and  the  rate  of  discount  above  the  average  in  the 
following  months : 

January,  October, 

May,  November ; 

and  (3)  that  in  the  remaining  two  months,  viz.,  April,  where 
a  reserve  below  the  yearly  average  coincides  with  a  rate  of 
discount  also  below  the  average,  and  December,  where  a 
reserve  above  the  average  coincides  with  a  rate  of  discount 
also  above  the  average,  are  obviously  transitional  months — 
the  low  average  rate  of  discount  in  April  being  followed  by  a 
high  average  in  May,  during  which  the  low  reserves  continues, 
and  the  high  average  rate  of  December,  while  the  reserve  is  also 
high,  being  obviously  the  continuance  of  the  high  average  rates 
of  October  and  November.  In  any  case,  notwithstanding  these 
two  exceptions,  the  correspondence  is  close  enough  to  establish 
the  general  proposition.  It  cannot  be  a  mere  coincidence  that, 
as  a  rule,  all  through  the  summer  from  June  to  the  end  of  Sep- 
tember reserves  should  be  high,  and  rates  of  discount  low,  and 
that  immediately  after,  in  October  and  November,  the  circum- 
stances should  be  reversed,  reserves  being  low  and  rates  high. 
It  would  have  been  desirable  to  include  in  this  table  the 
figures  as  to  the  note  circulation  of  the  different  banking 
systems  of  the  United  Kingdom — the  Bank  of  England,  the 
English  country  banks,  the  Scotch  banks,  and  tlie  Irish 
banks.  But  tliere  are  slight  variations  in  the  dates  of 
maximum  circulation  which  make  comparison  difficult.  The 
dates  for  all,  however,  are  as  a  rule  either  in  the  autunm  or 


GOLD    supply;     TUE    RATE    OF    DISCOUNT,    AND    PRICES.       Gl 

early  ^\'iutel•.  For  the  English  country  banks  it  is  Octoljer, 
when  the  proportion  to  the  yearly  average  in  the  thirty  years 
1845-74  was  105  ;  *  for  the  Scotch  banks  it  is  November  and 
December,  when  the  proportions  in  the  same  thirty  years  were 
107  and  100;  and  for  the  Irish  banks  it  is  also  November 
and  December,  when  the  proportions  in  the  same  thirty  years 
were  109  and  107.  The  date  for  the  expansion  of  the  Bank 
of  England  note  circulation  is  earlier,  being  from  July  to 
October.  In  each  of  these  months  the  proportion  of  103 
to  the  average  of  the  year  is  reached,  although  the  pro- 
portion in  August  and  September  is  somewhat  lower.  The 
combined  result  is,  as  regards  the  reserve,  that  October  is 
the  weakest  month  of  the  year,  and  that  the  weakness  is 
continued  in  November  and  December,  mainly  owing  to 
the  peculiarities  in  the  Scotch  and  Irish  banking  systems, 
the  tendency  in  England  alone  being  toward  improvement 
after  October,  It  is  unnecessary  here  to  go  into  all  these 
minutio}.  The  broad  and  general  effect  on  the  reserve  is  clear 
enough,  and  the  coincidence  of  that  effect  with  high  rates  of 
discount  in  the  autumn  on  the  average  of  years  is  also  clear. 
It  would  appear,  however,  that  although  in  the  greater 
number  of  years  the  reserve  is  weaker  in  October  than  it  is  in 
almost  every  other  month  of  the  year,  yet  the  rate  of  discount 
is  not  so  often  above  the  average  in  October.  It  is  in  years 
when  the  rate  of  discount  is  itself  above  the  average  of  a  long 
period,  that  the  rate  in  October  is  found  to  be  above  the  aver- 
age of  the  year.  The  comparison  is  not  without  interest.  To 
take  first  the  facts  as  to  the  reserve,  which  will  be  found  in 
the  completest  detail  in  Mr.  Palgrave's  Tables  down  to  1874. 
I  have  continued  these  Tables  to  the  present  time  for  my 
own  use,  but  it  is  unnecessary  to  print  the  new  figures  here. 

*  See  Mr.  Palgrave's  '  Notes  of  Evidence,  &c.,'  p.  382. 


62      GOLD   supply;     the   KATE    OF    DISCOUNT,    AND    PRICES. 

The  facts  are  that  in  the  ten  years,  1845-54,  the  reserve 
in  October  is  in  every  year  below  the  yearly  average,  often 
considerably  below.  In  the  next  ten  there  are  only  two 
years,  1858  and  1861,  in  which  it  is  above  the  average,  the 
first  of  these  following  a  year  of  panic,  which  is  always  a 
disturbing  element.  In  the  next  ten  years  there  are  three 
years  only,  1866,  1867  and  1870,  in  which  the  reserve  of 
October  is  above  the  yearly  average.  One  of  these  years, 
1866,  was  a  year  of  panic,  the  panic  being  in  the  early 
simimer;  another  year,  1867,  followed  the  year  of  panic;  and 
the  third  year,  1870,  was  a  year  of  Stock  Exchange  panic, 
with  a  minor  monetary  disturbance  in  July  in  consequence  of 
the  outbreak  of  the  Franco-German  war.  In  the  last  ten 
years  there  are  again  only  three  years  in  which  the  reserve  of 
October  is  above  the  yearly  average,  viz.,  1876,  1879  and 
1833.  Here  the  explanation  that  the  years  are  panic  years 
or  follow  panic  years,  does  not  apply ;  but  1876  was  the  year 
following  the  foreign  loans  collapse,  and  1879  succeeded  the 
year  of  the  City  of  Glasgow  Bank  failure,  which  were  events 
attended  by  more  or  less  disturbance  in  the  money  market 
similar  to  what  occurs  at  a  time  of  panic.  Generally,  therefore, 
we  may  say  that  the  reserve  in  October  is  usually  below  the 
yearly  average,  and  almost  the  only  exceptions  are  either  years, 
of  panic  when  the  panic  has  occurred  at  an  earlier  date  in  the 
year  or  years  following  the  panics  or  corresponding  events. 

When  we  come,  however,  to  the  rates  of  discount,  it  is  found 
that  in  the  first  ten  years  there  are  only  six  years  out  of  the  ten 
in  which  the  rate  is  above  the  yearly  average ;  in  the  next  ten 
years  four  out  of  the  ten  ;  in  the  next  ten  years  four  out  of 
the  ten  ;  and  in  the  last  ten  years  three  out  of  the  ten. 

But  the  years  in  which  October  is  above  the  yearly 
average  are  also  years  in  which  the  yearly  average  is  itself 
high,  as  the  following  Table  shows  : 


GOLD    supply;     the    FiATE    OF   DISCOUNT,    AND    miCES.       G3 


Statement  as  to  the  Years  in  which  tlic  October  Average  Rate  of  Dis- 
count is  higher  than  tlie  Yearly  Average,  showing  the  Average 
Eatc  of  each  Year  and  the  Average  for  tlic  Ten-years'  Period  in 
wliirh  it  is  comjiri.'^C'd. 


Years. 

Proportion  of 
October  nuint li- 
ly average  to 
yeai'ly  average. 

Average 
rate  of 
years. 

Average    of 
ten  years — 
1845-54, 
1855-64, 
1865-74, 
1875-84. 

1845      • 
1847      . 

1849  . 

1850  . 

1851  . 
1853      . 

1855  . 

1856  . 

1857  . 

1864  • 

1865  . 

1871  . 

1872  . 
1S73      . 

1877  . 

1878  . 
1882      . 

104 
126 
102 
100 
100 
136 

125 
107 
104 
123 

139 
188 
140 
126 

158 
148 
121 

£     s.     (/.   • 
2   13     7] 

5  3     4 
2   18  10 

2  10     3 
300 

3  13     9. 

4  18     9) 

6  I   10 

6  13    4 

7  6  10. 

4  16     3) 
2  iS     0 
4     III 
4  16    5-' 

2  18    2) 

3  16     4 

4  2     6] 

£     s.     (/. 

3  8     8 

4  14    8 

3  16    5 
3    3    8 

Thus  it  is  in  dear  years,  as  a  rule, — in  years,  tliat  is,  \vlicn 
the  average  for  the  year  is  higher  tlian  tlie  average  for  the 
ten  years  in  which  it  is  comprised  or  closely  approaches  that 
average, — tliat  the  effect  of  a  low  reserve,  usual  in  October, 
is  felt  in  making  the  rates  for  that  month  higher  than  the 
yearly  average. 

To  some  extent,  however,  it  is  to  be  observed  tliat  altliough 
the  average  reserve  is  somewhat  higher  in  November  tlian 
it  is  in  October,  yet  it  is  also  in  November  considerably 
below  the  average  of  the  year,  while  the  rates  of  discount 


64      GOLD    SUPPLY ;    THE    KATE    OF   DISCOUNT,    AND    PRICES. 

are  also  the  highest  on  the  average.  Here  the  number  of 
years  in  which  the  monthly  rate  of  discount  is  higher  than 
the  yearly  average  corresponds  better  than  October  with  the 
general  average  result,  as  the  following  Table  shows  : 


Statement  as  to  the  Years  in  -which  the  November  Average  Eate  of 
Discount  is  higher  than  Yearly  Average,  showing  the  Average 
Eate  of  each  Year,  and  the  Average  of  the  Ten-years'  Period  in 
■which  it  is  comprised. 


Averages  of 

Proportion  of 

Average 
rate  of 

ten  years — 

Years. 

November  month- 

1845-54, 

ly  average  to 

year. 

1855-64, 

yearly  average. 

1865-74, 

1875-84. 

£     s.     J. 

£     s.     d. 

1845      . 

125 

2   13     7 

1847 

147 

5     3     4 

1850 

100 

2  10  3y 

3     8     8 

1851 

100 

300 

1853 

136 

3  13  9 

1855 

142 

4  18  9 

1856 

115 

6     I   10 

1857 

141 

6  13     4 

i860 

120 

436^ 

4  14    8 

1862 

118 

2  10  II 

1863 

130 

4     7   10 

1864 

109 

7     6  10 

1865 

142 

4  16     3 

1868 

103 

2     III 

1871 
1872 

154 

158 

2  18    0 
4     III 

3  16    5 

1873 

168 

4  16     5 

1874 

119 

3  14     iJ 

1875 

110 

3     4    7] 

1877 

168 

2  18     2 

1878 

146 

3  16     4 

1879 

121 

2     7     6^ 

3    3    8 

1881 

143 

3  10    0 

1882 

121 

426 

1884 

164 

2  19    0 

GOLD  suitly;    the  rate  of  discount,  a\d  prices.     ('»."> 

Thus  ill  Xoveiiiln'i-,  if  not  in  Oct(»l)i'r,  tlu've  is  a  coiiiciik'ucci 
between  the  low  reserve  of  that  month,  and  a  liigli  average 
rate  of  clisconiit  in  each  year,  as  well  as  on  tlie  average  of 
long  periods.  The  explanatiuii  would  seem  to  be  that  while 
in  October  the  combination  (jf  causes  to  ]ao(hice  a  low  reserve 
is  most  marked,  the  effect  in  raising  the  rate  of  discount  is 
post])oiied  a  little,  and  Xovember  shows  tliat  effect  more  than 
October.  The  practice,  in  fact,  appears  to  be  that  tlie  rate  of 
(.liscouut  is  raised  after  the  reserve  has  become  low  and  not 
before,  and  so  a  month  like  November  which  succeeds  the 
month  of  the  absolute  minimum  of  reserve  exhibits  more 
frequently  tlian  that  month  a  higher  rate  of  discount  than  the 
yearly  average.  But  whether  we  take  October  or  November, 
the  tendency  of  the  reserve  to  be  at  its  lowest  about  that 
time,  and  the  tendency  of  the  rate  of  discount  to  be  about 
its  liighest,  is  obvious.  There  is  an  undeniable  coincidence, 
as  far  as  England  is  concerned,  between  low  reserves  and 
liigh  rates  of  discount  in  the  periodical  movements  of  the 
year. 

A  similar  coincidence  can  be  traced  between  the  periodic 
movements  of  reserve,  circulation,  and  rates  of  discount  in 
other  countries ;  but  it  would  encumber  the  present  paper — 
which  is  not  intended  to  be  statistical — to  enter  into  the 
details.  It  may  be  stated  broadly,  howiiver,  that  in  France, 
in  Germany,  and  in  the  United  States,  to  mention  the  leading 
countries  only,  there  is  absolutely  no  question  as  to  the 
tendency  of  coin  and  bullion  and  notes  to  go  out  of  the  banks 
in  the  autumn,  while  these  are  the  months  also  in  which,  as 
a  rule,  the  rate  of  discount  is  raised.  In  Germany  and  tlie 
United  States,  the  date  of  greatest  weakness  for  the  reserve 
appears  to  be  the  end  of  September  and  the  beginning  of 
October,  while  in  France  it  is  later ;  but  there  is  an  interval, 
of  greater  or  less  duration,  of  weakness,  in  wliich  rates  of 

11.  F 


66     GOLD  supply;   the  rate  of  discount,  and  PrjCES. 

discount  go  up.  As  a  rule,  also,  panics  occur  during  this 
interval  of  weakness.  Tliis  lias  been  the  well-known 
experience  in  England,  but  it  is  the  rule  abroad  also.  The 
great  panic  in  the  United  States  in  1873  was  at  the  end  of 
September.  The  last  financial  crisis  in  France,  viz.,  in  1882, 
occurred  early  in  the  year ;  but  still  during  the  interval  of 
weakness  which  begins  there  late  in  the  year  and  continues 
into  the  following  year.  When  there  are  panics  at  other 
dates  than  those  of  the  autumn  they  are  usually  in  April  or 
May,  which  are  also  times  of  comparative  weakness  of  reserve 
in  most  countries.  The  Vienna  panic  of  1873  and  our  own 
great  panic  in  1866  are  illustrations.  With  one  or  two 
exceptions  like  these,  great  panics  as  a  rule  have  occurred 
during  the  autumn  weakness. 

It  may  be  argued,  indeed,  that  the  increase  of  borrowing, 
when  rates  of  discount  increase  in  one  period  of  the  year  as 
compared  with  another,  is  the  cause  of  the  increase  of  rates. 
But  this  is  hardly  arguable.  The  increase  or  decrease  of 
borrowing  from  season  to  season,  as  compared  with  the 
general  liabilities  of  the  money  market,  is  obviously  quite 
inconsiderable,  and  is  in  fact  hardly  traceable.  An  increase 
of  borrowing  on  a  much  larger  scale  frequently  takes  place 
in  the  money  market,  in  connection,  for  instance,  with  a 
great  loan  operation,  with  hardly  any  effect  upon  rates. 
The  one  potent  influence  upon  rates,  therefore,  to  which 
these  periodic  fluctuations  must  be  ascribed,  is  the  condition 
of  the  reserve. 

It  follows,  consequently,  that  the  special  importance  of 
cash  in  the  modern  industrial  system,  though  it  is  not  as  in 
a  simple  system  a  large  portion  of  the  circu.lating  capital  of  a 
country,  is  established.  It  is  of  immense  regulating  power. 
It  is  able  to  produce  changes  in  the  money  market,  and  affect 
for  a  time,  at  least,  the  rate  of  discount  in  the  short  loan 


GOLD   supply;     the    RATE    OP   DISCOUNT,   AND    PlilCES.       G7 

market.  II'  the  rate  of  discount  in  turn  cannot  Ijut  affect 
operations  of  every  sort  on  which  prices  and  wages  depend, 
then  the  influence  of  "  cash "  on  transactions,  even  in  the 
modern  system,  is  placed  beyond  douLt.  It  is  not  apparent, 
liowever,  tliat  there  is  much  periodic  fluctuation  in  prices, 
varyin^L;'  witli  the  season  of  the  year,  Mr.  Jevons  suggests 
that  such  a  connection  can,  in  fact,  Le  traced.*  But  even  if 
this  could  be  proved,  I  could  not  hope  to  do  so  within  the 
limits  I  have  set  myself  at  present,  while  it  is  obvious  that 
frequently  many  prices  change  in  opposite  directions  to 
changes  in  the  rate  of  discount.  To  affect  prices  greatly  and 
over  long  periods  larger  variations  in  rates  of  discount  must 
take  place.  The  periodical  fluctuations  between  one  period 
of  the  year  and  another,  though  there  may  be  such,  would 
not  in  the  nature  of  the  case  be  easily  traceable,  and  would 
hardly  count.  What  happens,  I  suppose,  as  regards  the  effect 
of  these  minor  periodic  fluctuations  on  prices  is,  that  iwo  tanto 
they  produce  their  effect ;  some  operations  are  influenced ;  but 
the  effect  may  easily  be  lost  in  a  more  general  and  wider 
movement.  Prices  may  tend  to  fall  or  rise  through  a 
periodic  change  of  a  minor  kind  in  the  rate  of  discount ;  but 
"  other  things  "  may  not  be  equal,  and  the  rise  or  fall  does  not 
in  fact  take  place,  while  opposite  movements  occur.  A  change 
of  credit,  of  the  disposition  to  buy  or  sell,  may  make  all  the 
difference. 

The  next  proposition  I  have  to  lay  down,  however,  is,  that 
there  are  longer  periods  in  the  money  market  than  those  of 
a  single  year  or  its  seasons  ;  and  that  in  these  long  periods  a 
distinct  connection  can  not  only  be  traced  between  low 
reserves  and  high  rates  of  discount,  and  between  high  reserves 
and  low  rates,  but  also  between   high  and  low  rates  and 

*  See  'Investigations  in  Currency,'  above  referred  to,  jiuasim. 

F  '2 


68     GOLD  supply;   the  rate  of  discount,  and  prices. 

falling  or  rising  prices.  It  is  the  movement  only  ^vlliell 
is  here  in  question.  The  exact  range  of  prices  does  not 
seem  to  be  determined  by  the  rates  of  discount;  there  is 
constant  action  and  reaction,  and  the  rates  of  discount,  it  is 
arguable,  may  really  be  determined  to  some  extent  by  the 
prices  ;  but  prices  fall  when  rates  of  discount  are  continuously 
high  or  when  they  suddenly  become  high,  and  rise  when 
rates  of  discount  are  low  or  have  been  continuously  low  for 
some  time.  The  difficulty  in  such  matters  is  to  give  full 
effect  to  the  proviso  "  other  things  being  equal,"  but  on  a 
broad  review  of  the  facts  the  result  seems  clear  enough. 

To  take  first  the  connection  between  the  rate  of  discount 
and  the  reserve  over  long  periods.  Looking  back  for  the 
last  forty  years,  it  is  found  that  the  rate  of  discount  is  iii- 
,  variably  higher  in  years  of  low  reserve,  by  comparison, 
succeeding  years  of  larger  reserve  and  lower  rates.  There  is 
almost  all  through  a  steady  tendency  for  the  normal  reserve 
to  increase,  which  is  what  we  should  expect ;  but  what  we 
are  dealing  with  now  is  a  large  periodical  fluctuation  whicli 
can  be  traced,  notwithstanding  the  underlying  tendency  to 
increase.  The  facts  are  brought  to  a  point  in  the  follow- 
ing Table : 


Quinquennial  avekage  Reserves  and  Eates  of  Discount. 


Years. 

Pveserve. 

Rate  of  Discount. 

£     ,s.     d. 

1845-49 

8 

5 

3  II     4 

1850-54 

9 

8 

3     5   10 

1855-59 

8 

0 

4  14    3 

1860-64 

8 

4 

4  15     2 

1865-69 

9 

6 

3  18     3 

1870-74 

12 

8 

3  10     3 

1875-79 

13 

8 

2  19    7 

1880-84 

13-4 

3     7     7 

GOLD    SUPPLY  ;     THE    PvATE    OF   DISCOUNT,    AND    I'RICES.       GO 


Statement  comparing  the  Average  Yearly  Reserve  of  the  Bank  of 
England,  and  the  Average  Yearly  Eate  of  Discount  in  the  under- 
mentioned Years. 


Reserve.* 

Reserve. 

Rate  of 
Discount.* 

Rate  of 

Year. 

Above 

Below 

Year. 

Above 

Below 

Discount. 

average. 

average. 

average. 

average. 

£     s.     d. 

£     s.     d. 

1845 

8-5 

2  13    8 

1865 

8-0 

4  15    4 

1846 

8-5 

3    6    6 

1866 

6-7 

6  19    0 

1847 

5-2 

5    3    6 

1867 

12 -i) 

2  10    9 

1848 

9-7 

3  14    5 

1868 

11 -y 

2    1  11 

1849 

10-6 

2  18    7 

1S69 

10-3 

3    4    2 

1850 

11-2 

2  10    1 

1870 

12-4 

3    2    0 

1851 

9-1 

3    0    0 

1871 

141 

2  17    8 

1852 

12 -7 

2    3    0 

1872 

•  • 

I2-I 

4    2    0 

1853 

,, 

8-9 

3  13  10 

1873 

.. 

I2-0 

4  15  10 

1854 

.  , 

7-2 

5    2    3 

1874 

.. 

I  I  'O 

3  14    1 

1855 

.. 

8-3 

4  17  10 

1875 

n-5 

3    4    8 

1856 

,  , 

57 

6    12 

1876 

15 -i) 

2  12    1 

1857 

5'3 

6  13    3 

1877 

12-4 

2  18    0 

1858 

12'() 

3    4    7 

1878 

IO-8 

3  15    8 

1859 

11-1 

2  14    7 

1879 

18-4 

,, 

2    7    6 

i860 

8-4 

4    3    7 

1880 

16-0 

2  15    0 

1861 

7-6 

5    5    4 

1881 

13-7 

3  10    0 

1862 

10  "i 

2  10    7 

1882 

_ 

11*8 

4    2    6 

1863 

.. 

8-5 

4    8    2 

1883 

.. 

12-4 

3  11    3 

1864 

7-4 

7    8    0 

1884 

i3'3 

2  19    0 

Nothing  can  be  more  striking  in  this  Table  than  the 
correspondence  between  the  high  rates  of  discount  in  18G4-GC) 
(wliich  continued  down  to  June  of  18G6)  and  thclow  reserve 
of  those  years  compared  with  the  barge  reserve  of  1858-9; 
and  similarly  the  high  rates  of  1872-4  and  the  low  reserve 
of  these  years,  compared  with  the  years  just  before.  In 
1882-3  there  is  again  an  advance  of  rates  and  a  reduction  01 
reserve,  as  compared  with  what  it  luul  been  immediately 
before.     The  coincidence  is  not   quite  complete,  but  it  is 


•  The  reserves  of  each  year  are  compared  with  the  quin(iuenni:il 
averages.  For  these,  see  accompanying  table,  p.  68,  which  also  shows 
quinquennial  averages  of  rate  of  discount. 


70     GOLD  supply;   the  rate  of  discount,  and  pracES. 

complete  enough  to  indicate  that  there  is  a  large  periodical 
movement  in  the  reserve  and  rate  of  discount,  the  latter 
rising  as  the  former  falls,  compared  with  the  average,  and 
falling  as  the  former  rises,  also  on  a  comparison  with  the 
averasre.     The  absolute  amount  of  the  reserve  of  the  Bank  of 

O 

England  has  increased  in  the  whole  period  in  question  ;  but 
this  does  not  affect  the  present  conclusion.  The  normal 
reserve  ought  to  be  larger  in  a  progressive  country  from 
period  to  period.  But  whatever  that  normal  reserve  may  be, 
there  are  years  in  which  the  average  is  lower,  and  in  these 
years  as  a  rule  the  rates  of  discount  are  higher  than  the  average. 

The  years  oifcdling  prices  and  rising  prices  also  correspond 
as  a  rule  with  those  years  in  which  high  rates  and  low  reserves 
and  low  rates  and  high  reserves  are  combined.  It  would  be 
difficult  to  show  this  within  the  limits  of  such  an  essay  as 
the  present,  owing  to  the  multiplicity  of  prices  which  makes 
averages  difficult;  luit  the  coincidence  between  the  more 
prominent  of  the  above  figures  and  the  high  and  low  index 
numbers  *  is  not  difficult  to  point  out  (see  Table,  p.  71). 

Thus  in  years  like  1865  and  1886  with  which  the  Table 
begins,  there  is  an  obvious  connection  between  the  low 
reserve  and  high  rates  of  discount  of  those  years,  and  the 
high  Index  No.,  leading  in  the  following  years  1867-71  to 
a  simultaneous  fall  in  the  Index  JSTo.  and  the  rates  of 
discount,  and  an  increase,  of  the  reserve.  In  1872  the 
Index  ISTo.  again  increases,  and  simultaneously  there  is  an 
increase  in  the  rates  of  discount  and  a  low  reserve.  In  the 
following  years,  1875-9,  there  is  again  a  fall  in  the  Index  No. 
and  in  the  rates  of  discount,  but  there  is  no  such  marked 
improvement  in  the  reserve  as  in  1867-71.  In  1880  the 
Index  No.  again  rises,  and  rates  of  discount  rise,  but  it  is 

*  For  these  index  numbers  see  previous  Essay,  p.  19. 


GOLD  surriA';   the  kate  of  discount,  and  prices.     71 


not  till  1882  that  there  is  a  cuiiil)iiiali(.u  ot  low  reserve  and  a 
comparatively  high  rate  of  discount.  Since  1882  the  Index 
No.  and  rates  of  discount  have  declined  together,  but  the 
combination  of  a  high  average  reserve  with  the  latter  had 
Table  siiowinc  Years  in  which  the  Index  Number  shows  an 

IXCKEASE   OH    J)EC'KEASE    AS   C'OMl'AUED    WITH    rilEVIOUS    YeARS. 


Index  No. 

where  in- 

Y'ears  of  high 

Years  of  low 

crease  or  decrease  on 

reserve  and 

reserve  and 

Year. 

previous 

years.* 

low  rates. 
Hates. 

high  rates 
Rates. 

Increase. 

Decrease. 

£    A-.    '1. 

£    -s.      (/. 

1865    . 

3,575 

4   15     4 

1866    . 

3,561 

C  19     0 

1867    . 

■•  i 

3,024 

2  16*   9 

1868    . 

2,682 

2    1  11 

1869    • 

2,666 

3    4    2 

1870   . 

2,689 

3    2    0 

1871    . 

2,590 

2  17    8 

1872   . 

2,835 

420 

1873    . 

2,947 

.. 

4  15   10 

1874   . 

2,891 

.. 

.. 

3  14     I 

1875    • 

2,77s 

.. 

348 

1876    . 

2,711 

2  12    1 

1877    . 

2,715 

2  18     0 

1878    . 

,. 

2,554 

3  15     8 

1879    . 

2,202 

2  7  (; 

1880   . 

2,-538 

2  15    0 

1881    . 

2,376 

3  10    0 

1882    . 

2,435 

,, 

4     2     6 

1883    . 

2,342 

3  II     3 

1884   . 

•• 

2,221 

2  19    0 

not  occurred  up  to  the  end  of  1884.  An  aljsolutely 
close  correspondence  of  all  the  movements  in  the  three 
factors — the  index  numbers,  the  reserves,  and  the  rate  of 
discount — is  of  course  hardly  to  be  expected.f     The  general 

*  The  figures  of  the  Index  No.  are  grouped  in  series— there  being 
several  years  in  which  the  figures  are  high  compared  with  previous 
years  jnst  before,  or  as  the  case  may  be  low.  Minor  fluctuations  in 
single  years  arc  disregarded  in  this  arrangement. 

t  The  apparent  discrepancies  are  to  be  explained,  I  think,  by  a 
permanent  tendency  of  the  normal  reserve  to  fall  in  recent  years. 


72      GOLD    SUPPLY;     THE    LATE    OF    DISCOUNT,    AND    PRICES, 

tendency  of  prices  to  nm  in  cycles  along  witli  corresponding 
cycles  in  the  proportion  of  the  average  yearly  reserve  to  the 
qninquennial  average,  and  with  corresponding  cycles  in  the  rate 
of  discount  aj^pears,  however,  to  be  clearly  enough  Ijrought  out. 

A  main  point  to  be  studied  here  is  that  the  low  prices 
rather  succeed  the  high  discount  rates,  than  exactly  corre- 
spond, which  is  what  we  should  expect.  The  high  rates  cause 
sales  by  borrowers,  discredit  is  apt  to  attend  them,  and  so 
there  is  a  fall.  Similarly  it  is  rather  at  the  end  of  a  period 
of  low  rates  of  discount  that  prices  rise  than  at  the  beginning.* 

The  connection  between  low  reserves  and  high  rates  of 
discount  has  thus  been  made  manifest  statistically,  first  of 
all  on  a  comparison  of  one  period  of  the  year  with  another, 
and  then  on  a  comparison  of  one  group  of  years  with  another. 
It  has  also  been  shown  that  on  a  survey  of  longer  periods 
the  years  of  high  rates  and  low  reserves  end  in  falling  prices, 
and  the  years  of  low  rates  and  high  reserves  in  rising  prices. 
Statistical  proof  was  perhaps  hardly  required,  Ijut  it  may  be 
useful  nevertheless  to  have  produced  it.  It  seems  unnecessary 
to  go  farther  in  this  direction  and  to  prove  the  various  points 
in  the  theory  which  have  been  set  out  from  a  general  exami- 
nation of  the  facts  of  the  money  market.  As  regards  prices 
in  particular,  the  fact  of  great  changes  occurring  without 
previous  changes  in  the  money  market  is  so  obvious  as  to 
need  no  proof,  and  is  in  truth  one  of  the  facts  to  be  explained. 

*  It  would  be  found,  if  the  matter  were  investigated,  that  there  is 
one  set  of  prices  wiiicli  is  more  immediately  aflFected  by  discount 
rates,  viz.,  the  prices  of  Stock  Exchange  securities.  High  rates  of 
discount  tend  to  lower  Stock  P^xchange  prices,  and  low  rates  to  raise 
them.  But  to  some  extent  the  price  of  a  security  is  the  converse  of  a 
rate  for  a  loan.  A  high  price  is  a  low  rate  for  capital ;  a  low  price  a 
high  rate.  The  change  in  this  case  is  consequently  for  the  most  jiart 
direct,  and  merely  implies  that  the  rate  for  capital  of  one  kind  affects 
)>y  competition  the  rate  for  every  other  descrii:)tion.  The  subject 
hardly  comes  within  the  range  of  the  present  discussion. 


GOLD    SUPPLY  ;     THE    EATE    OF    DISCOUNT,    AND    PRICES.      78 

It  is  not  true  that  all  cliauL^^es  in  prices  occur  irrespective  of 
changes  in  the  money  market,  out  some  occur  in  that  way, 
and  the  recognition  of  that  fact  is  enough  for  the  present 
purpose.  On  the  other  hand,  while  a  general  connection 
between  high  rates  of  discount  and  falling  prices  and  con- 
versely hetween  low  rates  of  discount  and  rising  prices  has 
been  estal)lished,  and  by  means  of  this  the  connection  between 
high  and  low  reserves  and  prices,  it  would  be  impossible 
to  illustrate  in  detail  how  tlie  effect  is  produced.  Each  par- 
ticular price  and  group  of  prices  must  l)e  affected,  as  already 
explained,  by  causes  special  to  itself  as  well  as  by  rates  of 
discount;  changes  may  also  occur  in  prices,  as  above  explained, 
which  anticipate  changes  that  are  going  on  in  the  amount 
of  cash  required  for  the  business  of  the  country,  and  but  for 
which  anticipation  the  amount  of  cash  would  have  made  itself 
felt  directly  by  a  rise  or  fall  in  discount  rates.  That  a 
change  of  any  kind  is  perceptible,  which  can  be  connected 
with  changes  in  the  l)anking  reserves  and  in  the  rate  of 
discount,  is  enough  for  the  present  discussion. 


III.— THE  RECENT  GOLD  CONTRACTION. 

The  history  of  tlie  money  market  and  prices  in  recent  years 
corresponds  with  what  theory  would  lead  us  to  expect.  As 
explained  in  the  preceding  essay,  there  has  been  a  contrac- 
tion of  the  gold  supply  for  the  former  current  purposes 
{a)  by  extraordinary  demands  for  gold  for  Germany,  the 
United  States,  Italy  and  other  countries,  and  {h)  by  a  falling 
off  of  the  production.  And  there  has  in  fact  been  a  change 
in  money  values  and  prices  as  compared  with  previous 
periods  to  correspond,  while  there  is  no  other  cause  to 
account  for  the  changes. 


74      GOLD    supply;     the    FiATE    OF   DISCOUNT,    AND   PRICES. 

There  is  no  doiiLt,  first  of  all,  as  to  the  change  of  inone}' 
values  ^vhich  has  taken  place.  The  subject  is  fully  discussed 
in  the  previous  essay  in  this  volume.  I  only  note  here  j^our 
memoire  as  undoubted,  that  maximum  and  minimum  prices 
have  hoth  fallen.  Take  any  year  of  the  last  ten.  I'rices,  it 
will  be  found,  have  fallen  as  compared  with  the  corre- 
sponding year  of  the  previous  period.  In  the  following  Table 
the  index  numbers  already  quoted  are  so  arranged  that  each 
year  of  the  last  ten  is  compared  with  the  corresponding  year 
of  the  previous  decade,  and  it  appears  that  in  each  year 
tliere  is  a  decided  fall : 


Year. 

ludex  No. 

Year. 

Judex  Xo. 

Fall  ia 

1875-84. 

1865 

3,575 

1875 

2,778 

797 

1866 

3,564 

1876 

2,711 

853 

1867 

3,024 

1877 

2,715 

309 

1868 

2,682 

1878 

2,554 

128 

1869 

2,666 

1879 

2,202 

464 

1870 

2,689 

1880 

2,538 

151 

1871 

2,590 

1881 

2,376 

214 

1872 

2,835 

1883 

2,435 

400 

1873 

2,947 

1883 

2,342 

605 

1874 

2,891 

1884 

2,221 

670 

The  change  that  has  taken  place  is  therefore  a  chronic 
one.  It  is  not  the  result  of  accidental  circumstances  oc- 
curring in  particular  years. 

It  is  in  correspondence  with  this  fact  of  a  general  decline 
of  nominal  values,  that  the  income  tax  has  progressed  at 
a  less  rate  in  the  last  ten  years  than  in  the  previous  ten. 
The  comparison  is  thrown  out  a  little  l)y  the  increase  of 
"  exemptions  "  in  recent  years,  but  there  seems  to  be  no 
doubt  of  the  growth  of  the  assessments  lately  at  a  lesser 
rate  than  was  the  case  before  1875.  In  the  ten  years 
ending  1875   the   assessments  increased   from  371   to   543 


GOLD  supply;    the  rate  of  discount,  and  pkices.     75 


inillious,  or  4.")  per  cent.  In  the  folloAving  ten  years  tlic  in- 
oreage  was  from  043  to  029  millions  only,  or  about  15  per  cent, 
only.  The  exemptions  would  have  to  amount  to  about  IGO 
millions  if  the  rate  of  growth  had  really  continued  the  same. 

Workmen's  wages  have  been  affected  in  a  sin)ilar  maimer, 
though  it  is  impossiljle  to  give  an  aggregate  figure.  In 
many  directions  there  has  been  a  decrease,  and  it  is  doubtful 
whether  they  have  not  Ijeen  stationary  per  head  on  the 
average  as  income  tax  assessments  have  been. 

Next  I  have  to  notice  that  the  normal  amount  of  the 
Bank  of  England  reserve  does  not  seem  to  have  progressed 
of  late  years.  The  fluctuations  of  this  item  have  been 
irregular,  the  extreme  lowness  of  the  reserve  about  1864 
being  apparently  due  to  very  exceptional  causes  resulting  in 
the  panic  of  1866 ;  but  one  year  with  another  the  normal 
reserve  would  seem  to  have  been  lately  no  greater  than  it 
was  ten  years  before,  although  there  are  one  or  two  years,  viz., 
1876,  1879  and  1880  in  which  the  average  is  abnormally 
high,  whereas  an  increase  of  the  nominal  capital  of  the 
country,  proportioned  to  the  increase  of  commodities,  would 
have  caused  a  considerable  increase,  such  as  in  fact  occurred 
between  1860  and  1870.  The  annual  averages  of  each  uf 
the  last  two  periods  of  ten  years  have  been  : 

Reserve  of  Bank  of  England,  1865-84. 

First  ten  years  1865-74  : — 
1865  .         .         .8-0 


1866 
1867 
1868 
1869 
1870 
1871 
1872 
1873 
1S74 


Average 


6-7 
12 -y 
ll-l) 
10-3 
12-4 
141 
12-1 
12  0 
11-0 

111 


Second  ten  years  1875-84  :— 

1875  . 

11-5 

1876  . 

.  15-9 

1877  . 

.  12-4 

1878  . 

10-8 

1879  • 

18 -4 

1880  . 

16-0 

1881  . 

13-7 

1882  . 

11-8 

1883  . 

12-4 

1884  . 

13-3 

Average     .     13  •  6 


76     GOLD  supply;   the  bate  of  discount,  akd  prices. 

There  has  been  no  such  increase  of  the  reserve,  therefore, 
as  a  steady  increase  of  the  popuhition  in  numbers  and  wealth 
must  have  produced,  other  things  being  equal.  The  explana- 
tion must  be  that  everything  has  increased  but  nominal  values, 
and  as  the  function  of  the  reserve  is  related  to  nominal  values, 
the  reserve  has  not  increased.  It  is  no  doubt  quite  true  that 
if  we  go  back  for  a  long  period  we  shall  find  that  for  many 
years  after  the  Australian  and  Calif ornian  discoveries,  there 
was  no  such  increase  of  the  normal  reserve  as  miglit  perhaps 
have  been  expected.     Tlie  figures  for  the  whole  period  are  : 

Average  Annual  Amount  of  the  Eeserve  of  the  Bank  of 
England  in  following  Periods  : — 


1845-9 
1850-4 
1855-9 
1 860-4 
1865-9 
1870-4 
1875-9 


8-5 
9-8 
8-5 
8-4 
9-6 
12-3 
13-8 


1880-4 13-4 

The  ^  reserve  accordingly  did  not  Ijegin  to  increase  till 
after  1864.  The  rise  of  prices  and  nominal  values  which 
followed  the  above  discoveries  would  seem,  however,  to  have 
been  delayed  till  about  1860,  while  it  has  to  be  considered 
that  from  that  date  down  to  1866  the  money  market  was 
straitened  by  the  demand  for  gold,  which  was  created  in 
part  by  the  high  range  of  prices  and  wages  which  had  come 
to  prevail.  Now  the  normal  reserve  shows  hardly  any 
increase  as  compared  with  ten  years  ago,  although  the  rate 
of  discount  has  been  low.  The  low  prices  and  values  have 
made  a  low  normal  reserve  possible. 

The  demand  for  money  in  business  has  also  corresponded 
to  a  slower  increase  of  nominal  values.  It  is  unfortunately 
impossible  to  go  farther  back  with  the  Clearing  House 
Eeturns  than  1869.     But  comparing  each  year  since  1869 


GOLD  SUPPLY  ;     THE    R.VTE    OP    DISCOUNT,    AND    PRICES.        i 


with  a  period  ten  years  later,  as  far  as  that  is  possible,  we 
get  the  follnwiuL!;  (•(•mparison  : 

Keturns  of  thk  Bankers'  Clearing  House  in  the  under- 
MENTioNKD  Yeaus  COMPARED  (in  millions). 


Year. 

Aniiuint. 

Increase  in  1879-84. 

Year. 

1 

Amount. 

Per  cent. 

i' 

£ 

£1 

1869 

3,G26 

1879 

4,886 

1,260 

35 

1870 

3,914 

1880 

5,794 

1,880 

48  . 

1 87  I 

4,826 

1881 

6,357 

1,531 

32 

1872 

5,916 

1882 

6,221 

305 

5 

1873 

6,071 

1883 

5,929 

(-)I42* 

(-)2I 

1874 

5,937 

1884 

5,799 

(-)I38* 

{-)2h 

The  conspicuous  fact  here  is  that  while  there  is  an  increase 
in  1879-81  over  the  corresponding  period  ten  years  before, 
there  is  no  such  increase  when  we  now  compare  the  present 
time  with  years  like  1872-4.  From  the  latter  date  nominal 
values  have  declined. 

The  facts  as  to  the  bank-note  circulation  are  of  a  similar 
character,  though  they  require  a  little  explanation.  The 
annual  averages  for  the  United  Kingdom  of  the  quinquennial 
periods  1865-9,  1870-4,  1875-9,  and  1880-4,  have  been  39-3, 
42-6,  45-3  and  41*7  millions,  the  increase  in  the  last  quin- 
quennial period  compared  with  the  first  being  thus  about  (> 
per  cent,  only,  while  there  is  actually  a  decrease  in  the  last 
quinquennial  period  on  a  comparison  with  the  two  periods 
immediately  preceding.  The  decrease  as  compared  with 
1875-9  may  be  due  to  the  fact  that  in  that  period  the  circula- 
tion increased  specially  owing  to  discredit,  but  this  explana- 
tion obviously  does  not  apply  to  the  comparison  between 
1870-4  and  1880-4.  Neither  in  the  one  period  nor  in  the 
other  was  there  any  special  discredit.     There  is  a  decline, 

*  Decrease. 


78       GOLD    supply;     the    EATE    or    DISCOUNT,    AND   PRICES.  ^ 

however,  in   the  uote  circulation  of  the  United  Kingdom ;, 
amounting  to  about  2^  per  cent.* 

The  facts  as  to  gold  going  into  circulation  are  even  more 
instructive.  Writing  in  1872,t  I  calculated  that  the  annual 
sum  of  gold  received  by  the  United  Kmgdom  for  all  purposes, 
and  requii-ed  to  maintain  the  equilibrium  then  existing — an 
equilibrium,  that  is,  in  which  nominal  values  increased 
faster  than  population,  corresponding  in  some  measure  with 
the  increase  of  production  and  consumption — was  about 
£5,000,000.  This  was  based  upon  actual  figures  from  1858 
to  1872.  If  this  excess  of  imports  had  continued,  the  United 
Kingdom  wovdd  have  received  in  the  last  fifteen  years 
£75,000,000  of  gold,  and  in  the  last  ten,  £50,000,000 
Actually  the  receipts  in  quinquennial  periods  have  been  :  t 


Year. 

Average 
annual 
imports. 

Average 
annual 
exports. 

Average  annual  excess 
of  imports  or  exports. 

Imports. 

Exports. 

1870-4 

1875-9 
1880-4 

mlns.  £ 

19-5 
19-3 
10-4 

mlns.  £ 
i6'o 
17-6 
II-7 

mlns.  £. 

3-5 
1-7 

mlns.  £. 
i'3 

Thus  the  amount  received  in  the  last  fifteen  years  has  been 
in  fact  rather  less  than  £20,000,000 ;  in  the  last  ten  it  has 
been  about  £2,000,000  only;  and  in  the  last  five  we  have 
been  losing  gold  on  balance  at  the  rate  of  1^-  miUions  per 
annum.  Clearly  gold  lias  not  been  going  into  circulation  in 
proportion  to  an  increase  of  the  population  in  numbers. 
Here  the  plea  of  "economising  expedients"  does  not  avail 

*  For  the  figures  here  given  as  to  note  circulation,  see  First  Eeport 
of  Eoyal  Commission  on  Trade  Depression,  Api^endis,  p.  155. 

t  See  '  Essays  in  Finance '  (first  series),  p.  103. 

t  See  Eeport  of  Eoyal  Commission  on  Trade  Depression,  Appendix,. 
p.  156. 


GOLD    SUPriA';     THE    KATE    OF    DISCOUNT,    AND    I'lUOES.       79 

because  there  lias  been  neither  an  increase  of  reserve  nor  of 
transactions  at  the  Dankers'  Clearing  House  to  support  or 
indicate  an  increased  resort  to  such  expedients. 

As  regards  silver,  the  facts  are  that  while  the  addition  to  the 
silver  circulation  was  £1,200,000  per  aununij  on  the  average^ 
in  the  ten  years  ending  1874,  having  perhaps  been  rather  more 
than  usual  on  account  of  the  demand  for  silver  for  export  to 
India  in  the  immediately  previous  years,  1860-G4,  yet  the 
addition  in  1875-9  had  fallen  to  £700,000  per  annum ;  and 
in  the  last  five  years  there  is  a  small  annual  excess  of  exports  * 

In  every  direction,  then,  there  are  signs  of  a  change  of 
nominal  values.  Trices  have  fallen ;  the  income  tax  assess- 
ments do  not  increase ;  the  Bankers'  Clearing  House  returns 
fall  off;  the  Bank  reserve  is  stationary;  bank-note  circula- 
tion falls  off;  we  export  gold  instead  of  receiving  it;  the 
silver  token  currency  does  not  increase.  These  are  the 
phenomena  we  should  expect  from  a  contraction  of  gold 
through  the  decrease  of  production,  or  an  increase  of  the 
extraordinary  demands  upon  it,  along  with  an  increase 
of  business  itself,  i.e.,  in  the  things  produced  and  consumed. 
If  there  is  a  contraction  of  gold,  telling  on  bank  reserves 
and  telling  on  the  stocks  available  for  small  change,  the 
effects  above  described  should  be  produced.  It  would  be  a 
miracle  if  they  were  not  produced.! 

Turning   to   the  rate  of  discount,  we  find  the  facts  once 

*  See  Report  of  Eoyal  Commission  on  Trade  Depression,  Appendix, 
p.  156. 

t  The  decline  in  the  value  of  silver  might  also  be  referred  to  as 
proving  a  relative  contraction  of  gold.  Gold  and  silver  being  both 
used  as  standard  money,  and  gold  having  become  more  valuable  than 
it  was  relatively  to  silver,  there  must  either  have  been  contraction  in 
gold  or  expansion  in  silver.  One  or  the  other  event  must  have 
happened.  But  there  is  no  reason  to  l)elievc  in  the  expansion  of 
silver,  as  silver  prices,  thougli  tliey  have  risen  as  compared  witli  gold 
prices,  have  not  risen  absolutely.  This  argument,  however,  would 
rcqxiire  a  paper  by  itself. 


80     GOLD  supply;   the  rate  of  discount,  and  peices. 

more  in  correspondence.  What  we  find  first  is  a  striking 
disturbance  of  the  money  market  at  the  maximum  period  of 
high  prices,  1871-73,  when  the  contraction  of  gold  begins. 
With  lower  average  rates  than  there  were  in  the  period 
immediately  preceding,  indicating  a  greater  abundance  of 
capital,  and  with  very  low  minimum  rates,  yet  for  five  years 
the  market  was  "disturbed,"  and  for  ten  years,  from  1870 
inclusive,  there  was  at  least  one  month  in  every  year  in 
which  the  average  rate  amounted  to  or  exceeded  4^  to  5  per 
cent.  Excluding  1870,  which  perhaps  hardly  ought  to  count, 
as  it  was  a  year  of  money  panic  owing  to  the  Franco-German 
war,  while  the  extraordinary  requirements  for  the  German 
coinage  could  not  of  course  yet  bei  felt,  we  find  that  the  maxi- 
mum monthly  average  of  1871  was  4J  ;  of  1872,  G^  ;  of  1873, 
8|-  and  of  1874,  6  per  cent.,  the  highest  minimum  in  the 
whole  period  being  3;^  per  pent.  only.  There  could  be  no 
better  indications  of  an  abnormal  money-market.  Actually 
in  1873  the  rate  was  changed  no  fewer  than  twenty-four  times. 
Of  course  in  such  a  market  there  was  a  constant  influence  at 
work  to  produce  a  fall  of  prices.  The  following  five  years 
were  even  more  remarkable.  With  a  minimum  average 
montlily  rate  of  2  per  cent,  in  eacli  year,  the  following  maxi- 
mum monthly  rates  were  nevertheless  touched,  viz.  : 

1875  ....  41 

1876  .        .        .        .  4f 

1877  .        .        .        .  4| 

1878  .        .         .         .  6| 

1879  .         .         .        .  H 

Such  relations  are  almost  without  example.  When  2  per 
cent,  'rates  have  prevailed  hitherto,  the  maximum  as  a  rule 
has  been  correspondingly  low ;  if  now  tliere  is  a  relatively 
high  maximum,  it  is  surely  a  sign  of  special  circumstances 
affecting  the  money  market  which  cause  the  reserve  to  be 
trenched  upon  when  it  would  otlierwise  be  continuously  full. 


GOLD    SUPPLY;     THE    RATE    OF   DISCOUNT,    AND    PRICES.       81 

In  the  last  five  years  rates  have  on  tlie  average  been 
liigher  than  in  the  five  years  before,  corresponding  to  the 
better  times  for  trade ;  but  the  niaxiniuni  has  been  no  greater 
than  in  1875-9,  although  there  is  only  one  year,  1884,  in 
Nvhich  tlie  niininmm  of  1875-9  is  touched.  The  inference 
would  be  that  in  the  last  five  years  the  money  market  has 
been  less  disturbed,  thougli  it  has  not  been  free  from  disturb- 
ance; but  the  cause  of  tlie  cheapness  is  the  abumUuice  of 
capital,  which  in  turn  is  due  to  the  inability  of  the  money 
market  to  rally,  a  big  reserve  being  never  allowed  to  accumu- 
late, but  being  dispersed  in  all  directions  by  the  greatly 
increased  current  demands,  resulting  in  a  temporary  rise  of 
discount  rates,  renewed  discredit,  want  of  confidence,  and  a 
still  keener  competition  and  lower  prices.  In  the  present 
year  (1885),  when  with  dull  trade  and  low  prices  the  reserve 
should  be  full  and  discount  rates  low,  we  find  that  with  a 
minimum  of  2  per  cent,  there  is  again  to  be  a  comparatively 
liigh  maximum  (4  per  cent.)  within  the  year. 

To  sum  up — what  I  have  to  say  of  the  recent  discount 
rates  is  that  while  there  has  been  an  undoul)ted  fall  in  recent 
years,  corresponding  to  the  abundance  of  capital,  yet  the 
market  has  been  fevered  by  the  demands  on  the^reserve, 
although  that  reserve  itself  has  remained  in  a  kind  of  equili- 
brium with  the  demands  upon  it,  in  consequence  of  the  ad- 
justment of  nominal  values  which  has  been  goiu^-  on,  at  times, 
through  the  operation  of  temporary  advances  in  the  rate  of 
discount,  and  incessantly  through  the  direct  action  of  com- 
petition and  production — it  is  not  necessary  to  assume  over- 
production. If  capital  hud  been  scarce,  there  would  have 
been  high  rates  continuously,  as  in  1864-05,  followed  by  a 
great  fall  of  prices,  accompanied  or  not  accompanied,  as 
accident  might  determine,  by  a  panic ;  but  capital  has  not 
been  scarce.     Consequently,  th.mgh  the  money  market  has 

11.  G 


82     GOLD  supply;   the  rate  of  discount,  and  prices. 

been  feverish,  and  there  have  been  many  spasms  of  dearness, 
rates  on  the  average  have  been  low.  But  prices  do  not  re- 
cover as  they  did  after  1866,  and  they  cannot  recover.  There 
is  no  potential  reserve,  and  no  potential  stock  of  gold  available 
for  the  demands  of  small  change  which  would  inevitably 
spring  up  along  with  a  rise  of  prices,  profits,  and  wages. 

The  monetary  history  of  recent  years  has  accordingly  been 
very  like  what  was  to  be  expected  on  the  theory  above  set 
forth,  assuming  a  contraction  of  gold  to  liave  occurred.  All 
nominal  values  have  diminished,  or  failed  to  increase  as  they 
ought  to  have  increased,  other  things  being  equal,  along  with 
an  increase  in  population  and  wealth ;  bank  reserves,  note 
circulation,  small  change.  Bankers'  Clearing-House  returns 
and  the  like  figures,  have  all  moved  in  correspondence ; 
finally  the  money  market  has  been  irritable  and  feverish  in  a 
remarkable  manner  during  the  period  of  contraction.  On  any 
other  theory  the  monetary  history  of  the  last  few  years  would 
be  unintelliuilile. 


IV.— SUMMARY  AND  CONCLUSIONS. 

It  will  now  be  convenient  to  state  briefiy^the  main  propositions 
of  this  essay,  and  the  evidence  on  which  they  rest. 

1.  In  a  simple  industrial  system  prices  are  directly 
affected  by  a  contraction  or  increase  of  the  supply  of  money. 
The  rate  for  loans  is  also  directly  affected,  cash  being  relatively 
a  very  important  item  of  circulating  capital. 

2.  In  a  complex  industrial  system  in  which  bills  of 
exchange,  bank  note  issues,  banking  deposits  and  accounts, 
checiues,  clearing  houses,  and  other  agencies  are  made  use  of, 
alon;''  with  an  extensive  organisation  of  credit,  to  economise 
Ijoth  cash  and  capital,  prices  are  no  longer  directly  affected 
by  the  cash.  Immense  and  almost  indefinite  changes  of 
prices  may  take  Y)lace  on  the  same  apparent  basis  of  cash. 


GOLD  supply;   the  rate  of  discount,  and  prices.     83 

As  regards  loans,  also,  cash  ccasi's  to  be,  in  such  a  system,  a 
considerable  item  of  the  total  capital  of  a  country,  -vvhetlier 
circulating  or  fixed.  Its  amount  would  seem  to  have  no 
direct  relation  to  the  rate  for  loans. 

3.  Cash  is,  nevertheless,  of  special  importance  in  a  complex 
industrial  system,  and  is  intimately  I'clated  both  to  the  I'ate 
of  discount  in  the  short  loan  market  and  to  prices.  This 
special  im})ortance  is  due  to  two  things,  (a.)  Cash  is  wanted 
in  the  complex  system  as  a  Ijanker's  reserve,  and  the  amount 
of  that  reserve  depends  on  the  banker's  liabilities,  which  in 
turn  are  regulated,  other  things  being  equal,  l»y  the  amount 
of  the  nominal  values  of  capital.  If  the  nominal  values  are 
large,  more  reserve  is  required  than  if  they  are  small.  Hence 
there  is  incessant  action  and  reaction  between  the  reserve 
and  nominal  values,  (h.)  Cash  is  wanted  in  the  complex  system 
as  small  change,  the  amount  of  the  small  change  reipiired 
depending  in  turn  on  the  rate  of  wages  and  profits,  i.e.,  on 
nominal  values.  A  high  range  of  wages  and  profits  demands 
more  cash  than  a  low  range.  The  requirements  of  cash  on 
the  latter  account  appear  to  be  larger  than  those  in  con- 
nection with  the  reserve  ;  but  the  two  are  interconnected,  a 
reserve  being  more  efficient  if  there  are  large  amounts  of  coin 
circulating  to  be  drawn  upon,  and  vice  versa. 

4  The  effect  is  that  although  the  rate  for  loans  is  un- 
doubtedly dependent,  as  regards  its  normal  condition  and  the 
more  permanent  changes,  on  the  scarcity  or  abundance  of 
capital  in  relation  to  the  demands  upon  it,  and  although  prices 
change  within  very  wide  limits  on  the  same  basis  of  cash,  yet 
in  the  complex,  as  in  the  simple  system,  the  element  of  cash  is 
important.  As  regards  the  rate  for  loans,  it  has  much  immediate 
effect  on  the  short  loan  market,  and  through  that  market  on 
general  prices.  A  scarcity  of  cash,  other  things  being  e([ual, 
tends  to  lower  prices — aluindance  of  cash  to  raise  ihem.    High 

G  2 


8-i      GOLD    SUPPLY ;     THE    FwATE    OF   DISCOUNT,    AND    PRICES. 

prices  again,  by  increasing  the  demand  for  small  change,  tend 
to  make  cash  scarce  and  low  prices  to  make  it  abundant ; 
and  these  tendencies  in  turn  react  on  the  rate  of  discount. 

5.  Changes  of  prices  may,  and  in  fact  do,  occur  from 
other  causes  than  changes  in  discount  rates,  and  may  antici- 
pate such  changes,  so  that  the  market  may  adjust  itself  to  a 
new  state  of  things  as  regards  prices,  without  those  changes 
in  the  rate  of  discount  which  would  otherwise  occur,  and 
which  would  bring  about  the  adjustment.  Slight  changes  in 
discount  rates  may  accordingly  co-operate  in  bringing  about 
great  adjustments  which  it  would  seem  to  be  beyond  their 
power  to  effect. 

6.  It  follows  tliat  in  a  complex,  as  in  a  simple  system,  the 
supply  of  new  gold  from  the  mines  is  important.  Other  things 
l)eing  equal,  a  constant  new  supply  is  necessary  for  reserve 
and  small  change,  so  as  to  keep  affairs  in  the  money  market 
in  equilibrium.  Population  and  production  are  constantly 
being  increased,  and  the  gold  used  for  reserves  and  small 
change  must  be  increased  in  proportion.  Otherwise  the  effect 
of  contraction  is  necessarily  produced. 

7.  In  actual  fact  the  importance  of  cash  in  the  money 
.  market  is  proved  by  experience.     In  one  period  of  the  year 

reserves  as  a  rule  are  lower  and  rates  of  discount  higher  than 
at  other  periods.  In  one  group  of  years  reserves  are  also 
lower  and  rates  higher  than  in  others.  When  there  is  much 
strain  on  the  reserve  from  any  cause,  rates  are  high  and  the 
money  market  disturbed. 

8.  Eecent  experience  has  also  shown  that  the  effects  which 
mi^rht  have  been  expected  from  a  serious  contraction  of  gold, 
owino-  to  diminished  production  and  the  heavy  demands 
which  have  faUen  on  bank  reserves  and  the  cash  used  for 
small  change,  have  in  fact  been  produced.  Prices  have 
fallen ;  nominal  values  have  not  increased  in  proportion  to  the 
increase  of  production ;  bank  reserves.  Bankers'  Clearing-House 


GOLD    SUPPLY  ;     THE    RATE    OF    DISCOUNT,    AND    PRICES.       bO 

returns,  l)aiik-H(ite  circulatidu,  cash  used  for  small  change — 
liave  all  been  stationary  or  declinin.g' ;  the  money  market  has 
been  disturbed  in  the  way  in  which  a  contraction  of  the 
gold  supply  might  have  been  expected  to  disturb  it. 

9.  As  the  result,  the  importance  of  a  new  supply  of  gold 
from  the  mines  i^;  fully  proved.  Other  things  being  equal, 
increase  of  population  and  wealth  means  an  addition  to  the 
stock  of  gold  in  use,  and  if  there  can  be  no  such  increase 
owing  to  diminished  production  or  extraordinary  demands, 
the  market  can  only  get  adjusted  to  the  contraction  by  a  fall 
of  prices  and  nominal  values  such  as  have  taken  place  in  the 
last  few  years.  The  general  fall  of  prices  need  not  take  place 
exclusively  through  a  rise  in  discount  rates,  though  it  may  he. 
assisted  by  such  a  rise;  but  when  it  takes  place  it  may  obviate 
a  rise  which  would  otherwise  have  occurred.  The  adjustment 
must  somehow  be  made. 

10.  The  question,  "other  things  being  equal,"  is  of  course 
specially  important.  It  has  often  been  suggested  that 
economising  expedients  may  be  relied  upon  to  counteract 
a  contraction  of  gold.  But  in  countries  which  are  fully 
"  banked  "  and  "  papered,"  there  appears  to  be  a  limit  to  new 
economies  of  that  description.  A  country  long  used  to  bank- 
note issues  and  the  cheque  system  can  hardly  have  any  exten- 
sion of  econondsing  expedients,  except  in  a  very  gradual  way. 

Such  being  the  conclusions  on  the  question  discussed, 
we  may  consider  for  a  moment  wliat  is  the  prospect  in  the 
immetliate  future  as  regards  the  money  market  and  prices, 
llow^  far  does  the  probable  gold  sup])ly  correspond  with  the 
probable  increase  of  population  and  wealth  among  gold-using 
countries  ?  How  far  will  any  scarcity  be  mitigated  or  abun- 
dance increased  by  economising  expedients  ? 

This  is  a  statistical  question  which  need  only  be  answered 
very  briefly — to  show  what  are  the  possibilities  of  the  f\iture. 

The  supply  of  gold,  to  begin  with,  may  be  jait  roughly  at 


8i5    GOLD  supply;   the  rate  of  discount,  and  prices. 

£20,000,000  annually.  Mr.  Soetbeer's  latest  estimate  is  rather 
less,  but  in  a  calculation  like  the  present  a  million  or  two 
is  not  very  material. 

The  next  question  is  of  the  demands.  There  is  first  the 
demand  for  gold  for  use  in  the  arts,  which  is  put  by- 
Mr.  Soetbeer  at  nearly  £10,000,000 ;  but  which  is  not  half 
that  amount,  as  far  as  I  can  judge,  if  we  exclude  what  is 
taken  for  the  arts  out  of  the  coinages  of  different  countries, 
and  which  will  be  counted  among  the  coinage  requirements. 
Let  the  estimate  for  this  purpose  be  £5,000,000. 

The  next  demand  is  for  the  gold  reserve  and  coinage  of 
different  countries.  The  principal  reserves  and  stocks  of  that 
kind  are  the  following — 

mlns.  £ 

.Bank  of  England        .         .         .  average  25 

„      France ....  „  45 

„       Germany        ...  „  20 

United  States  Government,  including  )  ^q 

gold  certificates  of  Banks.         .  )      " 

Bank  of  Eussia  .         .         .         .  „  25 

Other  banks       ....  say?  25 

Total        180 

This  is  not  a  large  amount ;  but,  as  we  have  seen  in  the 
course  of  this  inquiry,  the  requirements  of  gold  for  small 
change  are  more  important  than  the  requirements  for  the 
reserve.  The  total  must  be  very  much  larger.  M.  Ottomar 
Haupt,  an  excellent  authority,  estimates  that  in  all  the  stock 
of  gold  in  circulation  or  in  reserve  in  the  different  countries  of 
the  world,  silver-using  and  double  standard  as  well  as  gold- 
using  countries,  exceeds  £700,000,000.*  Using  this  figure  as 
the  basis,  I  have  to  submit  the  following  calculation  : 

The  annual  re(|uirements  for  gold  reserve  and  coinage  on 
the  basis  of  an  increase  of  population  at  the  rate  of  rather 
more  than  1  per  cent,  in  ten  years  would  be  15  per  cent,  in 

*  "Wahrungs  Politik  und  Miinz  Statistik,  Berlin,  1884.  Verlag 
Ton  Walther  und  Aiiotant. 


GOLD  supply;   the  rate  of  discount,  and  prices.     S7 

ten  years; and  if  we  allow  10  per  aait.  additional  for  increase 
of  wealth,  we  get  an  increase  of  25  per  cent,  in  ten  years,  or, 
say  roughly,  2  per  cent.  ])er  annum.  This  would  mean  at 
present  a  demand  of  £14,000,000  per  annum  to  keep  up  a 
stock  of  £700,000,000,  and  the  proportion  would  year  by 
year  become  less  and  less  sufficient. 

The  two  sums  together,  £5,000,000  for  the  arts  and 
£14,000,000  for  reserves  and  coinage,  would  just  about  absorl. 
the  present  supply.  There  is  no  margin  for  any  extraordinary 
demand,  however  slight. 

The  conclusion  accordingly  is,  that  apart  from  economising 
expedients  there  is  no  rise  in  nominal  values  probable,  one 
year  with  another.  If  there  is  abnormal  depression  at  the 
present  moment  it  will  be  recovered  from,  but  the  average 
level  of  prices  and  nominal  ^•alues  in  the  next  ten  yea.rs  will, 
if  anything,  be  rather  less  than  in  the  last  ten.  If  a  new 
extraordinary  demand  of  a  large  amount  should  arise,  ])rices 
would  probably  fall  in  proportion  to  the  amount  extracted 
from  existing  coinages  and  reserves ;  and  the  money  market 
would  be  feverish  and  disturbed. 

The  only  (piestion  thus  comes  to  be  as  to  the  extension  of 
economising  expedients.  England,  it  seems  obvious,  could  do 
something  to  mitigate  the  apparently  impending  contraction 
by  resorting  to  one-pound  notes.  In  Trance  and  other 
countries  there  is  also  to  all  appearance  much  room  for  the 
extension  of  the  banking  deposit  and  cheque  system.  But  is 
it  likely  that  much  will  in  fact  be  done  in  any  of  these  ways  '. 
Conservatism  in  money  matters  is  very  strong,  and  my  own 
belief  is  that  the  introduction  and  extension  of  any  such 
economising  expedients  will  be  so  gradual  that  all  the  effects 
of  contraction  will  in  fact  be  felt.  It  should  be  considered 
of  special  importance  that  the  gold-using  country  which 
is    now    progressing    most    rapidly   is    the    United    States, 


88      GOLD    SUPPLY  ;     THE    RATE    OF   DISCOUNT,    AND    PRICES. 

wliich  requires  a  very  large  amount  of  circulation  per  head, 
and  which  appears  to  be  specially  fettered  in  its  bank  note 
and  paper  circulation,  so  that  the  demand  in  the  United 
States  may  be  in  even  greater  proportion  than  2  per  cent,  per 
annum.  It  would  thus  appear  inexpedient  to  place  much 
reliance  on  the  mitigating  effect  of  economising  expedients. 

It  remains  to  be  added — what  perhaps  might  go  without 
saying — that  any  understatement  in  the  above  calculation  of 
requirements  imphes  that  not  only  can  there  be  no  increase 
of  prices  and  nominal  values  in  the  next  ten  years,  but  that 
there  will  probably  be  a  fall.  Even  if  economising  expedients 
are  introduced,  their  effect  can  only  be  temporary.  The 
permanent  set  of  the  facts  is  the  other  way. 

I  do  not  propose  to  discuss  at  present  the  general  effects  of 
the  economic  conditions  described.  I  did  so  some  years  ago 
on  one  or  two  points  in  a  special  essay  reprinted  in  the 
present  volume.*  But  I  am  quite  certain  I  have  not  ex- 
hausted the  subject,  nor  would  it  be  easy  to  exhaust  it.  Many 
more  things  besides  the  betterness  or  worseness  of  trade  are 
involved.  The  social  effects  of  a  fall  in  prices  and  wages, 
continued  from  generation  to  generation,  are  gi'eat  and  per- 
vading, as  we  see  in  the  present  fall  of  rents,  the  inelasticity 
of  the  national  revenue,  and  the  increasing  burden  of  all 
debts — the  national  debt  and  the  debts  of  local  authorities 
included.  Nice  problems  seem  also  likely  to  be  raised  with 
regard  to  a  revisal  of  railway  rates  and  other  fixed  charges 
in  the  State  concessions  of  monopolies.  The  problems  are  in 
truth  endless,  which  at  bottom  are  finally  dependent  on  this 
question  of  the  annual  gold  supply  and  the  probable  demands 
upon  it. 

*  See  next  Essay. 


(     S9     ) 


III. 

THE  EFFECTS  ON  TIIADE  OF  TUE  SUPPLY  OF 
COINAGE. 

/. 

The  question  I  propose  to  discuss  is  the  comparative  effect 
on  the  growth  of  the  wealth  of  communities  of  an  excessive 
or  insufficient  supply  of  the  precious  metals  for  their  current 
wants.  It  is  possil)le  that  the  subject  has  been  formerly 
discussed  in  some  works  on  political  economy,  Imt  I  doulit 
if  the  discussion  has  anywhere  been  exhaustive,  although  the 
references  have  been  frequent.  To  go  very  far  back,  indeed, 
I  should  judge  from  a  reference  to  Xenophon,  in  the  work 
of  M.  Lenormant  on  Ancient  Money  whicli  lias  just  been 
published,  that  Xenophon  had  assumed  an  indetinite  addi- 
tion to  the  silver  coinage  of  Athens  to  be  desirable  as  leading 
to  an  increase  of  wealtli,  so  that  as  long  ago  as  the  time  of 
Xenoplum  the  subject  must  have  attracted  attention,  and  a 
decision  in  favour  of  an  excessive  supply  of  the  })recious 
metals  had  been  pronounced.  Xenophon's  opinion,  however, 
seems  to  liaA'e  been  based  very  much  upon  the  special  cir- 
cumstances of  the  repulilic  to  which  he  belonged,  which  was 
a  silver-prodiicing  country,  and  which  no  doul»t  gained  in- 
definitely by  being  able  to  produce  large  (juantities  of  an 
article  in  great  demand  elsewhere.  Other  references  of  a 
.similar  kind  are  to  be  found  in  more  nKKkrn  ^vl■itl•l■s.  \\liile  a 


90  THE    EFFECTS    ON    TKADE 

passage  in  Adam  Smith  points  out  that  prices  and  affairs 
will  be  gradually  adjusted  to  the  diminished  or  increased 
supply  of  the  precious  metals  without  touching  on  the  effects 
upon  trade — adverse  or  otherwise — in  the  process  of  adjust- 
ment. An  analogous  subject  has  been  discussed  in  the 
controversies  ujjon  inconvertible  paper,  for  which  there  are 
advocates  on  the  score  of  the  assumed  conduciveness  to 
material  prosperity  of  constant  additions  to  the  supply  of 
money,  and  opponents  on  the  ground,  amongst  others,  that 
the  prosperity  so  jjroduced  is  unreal,  and  not  lasting.  But 
the  ■  analogy  is  obviously  incomplete,  as  an  inconvertible 
paper  can  only  be  added  to  artificially,  while  the  metallic 
money  is  added  to  by  natural  processes.  "\Miat  has  hap- 
pened with  inconvertible  paper  may  be  useful  in  illustration^ 
but  the  essential  difference  between  a  sound  metallic  cur- 
rency, forming  the  standard  money  of  a  country,  and  any 
form  of  inconvertible  paper,  we  may  here  assume,  I  hope, 
must  always  be  important.  The  most  extended  discussion  of 
the  point  that  I  am  aware  of  is  in  the  continuation  of 
Tooke's  '  History  of  Prices,'  where  the  great  value  to  trade 
of  a  sufficient  supply  of  new  money  is  insisted  upon  ;  but  the 
argument  is  mainly  directed  to  show  that  very  large  supplies 
of  new  money  would  not  in  fact  raise  prices  so  much  as 
those  who  were  alarmed  about  the  gold  discoveries  appre- 
hended, and  is  thus  to  a  great  extent  a  negative  argument  to 
reconcile  people  to  these  gold  discoveries,  and  not  professedly 
a  comparison  of  what  happens  in  a  regime  of  rising  prices 
with  what  happens  in  a  regime  of  falling  prices. 

In  coming  to  the  discussion,  I  should  like  to  make  one  or 
two  preliminary  remarks,  partly  to  explain  how  the  subject 
now  becomes  important,  and  partly  to  narrow  the  question 
for  inquiry  and  explain  the  assumptions  implied  in  it.  The 
importance  of  the  subject  is  due  entirely,  I  believe,  to  the 


OF    THE   SUPPLY    OF   COINAGE.  91 

increasing  com])lexity  of  modern  hnsiness,  and  the  diminisli- 
iiig  (|n;uiti(y  of  money  in  pvopovtion  to  transactions  re(inin'il 
in  connnercial  affairs  as  now  carried  on.  In  early  stages  of 
society  where  credit  is  not  developed,  it  is  difficult  to  con- 
ceive of  almost  any  change  in  the  annual  supply  of  the 
precious  metals  for  rejjairing  waste  of  coinage  and  tlie  like 
having  much  effect  on  the  productive  energies  of  a  peo^jle, 
except  perhaps  on  a  State  like  Athens,  which  was  a  producer 
of  the  precious  nietnls.  In  such  a  community  the  quantity 
of  money  in  pro])ortion  to  the  exchanges  effected  must  be  at 
a  maximum  ;  the  growth  of  population  is  usually  slow  ;  the 
conditions  are  such  that  an  excessive  or  deficient  supply  of 
the  precious  metals  would  only  affect  prices  slowly.  With 
a  little  pinching,  existing  money,  if  there  was  a  deficient 
supply,  would  be  made  to  fit  actual  transactions,  while  the 
additional  influx,  if  there  was  an  excessive  supply,  would 
not  at  first  be  felt.  The  haliits  of  hoarding  in  such  a  com- 
munity would  also  mitigate  the  effects  of  changes  in  the 
annual  supply.  There  would  consequently  be  no  stimulus 
or  check  one  way  or  the  other  to  the  productive  energies  of 
the  community,  such  as  I  assume  for  the  present  great  and 
sudden  changes  of  prices  are  likely  to  produce.  But  tl)e 
result  of  carrying  on  larger  and  larger  transactions  on  a 
narrow  basis  of  coin  or  bullion  is  to  magnify  the  relative 
importance  of  changes  in  that  article.  It  may  still  be  true, 
and  I  believe  is  true,  that  the  bullion  in  a  country  under  a 
given  set  of  conditions  is  the  final  measure  of  prices  in  that 
country;  that  an  addition  to  the  quantity  or  a  deduction 
from  it  distur1)S  the  equililjrium,  and  tlie  balance  is  (»nly  set 
right  again  by  an  adjustment  of  prices.  But  the  measure- 
ment is  more  difficult  to  perceive  than  where  the  daily  trans- 
actions of  life  are  daily  settled  by  the  i>assage  of  actual  coin, 
and  where  botli  the  liabit  of  hoarding  and  the  habit  of  using 


92  THE    EFFECTS    ON    TRADE 

the  precious  metals  fur  ornament  are  probably  very  much 
developed.  In  highly  advanced  communities  prices  are  ad- 
justed by  the  complex  machinery  of  the  money  market  and 
the  varying  rates  of  discount,  and  through  the  agency  of 
waves  of  credit  and  discredit,  to  which  all  commercial  com- 
munities are  subject,  not  by  the  direct  processes  of  a  bar- 
barous or  less  advanced  community.  Hence  the  probability 
of  prices  in  an  advanced  community  only  being  adjusted  to 
the  supply  of  precious  metals  with  gi-eat  indirect  effects 
on  productive  energies.  Anything  that  affects  the  money 
market  greatly,  I  need  hardly  say,  and  which  sets  in  motion 
such  powerful  agencies  as  credit  and  discredit,  must  have  a 
potent  influence  on  the  production  of  wealth  in  such  com- 
munities. Almost  without  showing  the  modus  operandi,  we 
may  assume  that  a  country  like  England,  with  a  bullion  and 
coin  stock  of  something  like  150  millions,  which  is  probably 
little  more  than  between  1  -and  2  per  cent,  of  the  country's 
wealth,  is  likely  to  be  affected  more  seriously  by  slight 
changes  in  that  stock  than  where  the  stock  is  a  sensible  part 
of  the  national  fortune. 

Tlie  subject  also  becomes  important,  perhaps,  because  of 
what  I  may  call  the  statistical  position  of  the  question  at 
the  present  time.*  Not  only  is  the  relation  of  the  annual 
supply  of  the  precious  metals  to  the  stocks  in  use  more  im- 
portant than  ever  it  was,  but  we  seem  to  be  at  the  beginning 
of  one  of  the  many  oscillations  to  wliich  the  value  of  the 
precious  metals  has  in  the  course  of  history  been  subjected. 
Adam  Smith  believed  that  from  the  American  discoveries  in 
the  sixteenth  century  till  the  time  he  wrote,  the  value  of 
silver  had  been  depreciating  and  prices  rising,  but  he  thouglit 
tlie   tendency  was  changing ;  while   there   is  equally  little 

*  This  was  written  and  published  anonymously  in  1879. 


OF   THE    SUPPLY    OF    COINAGE.  93 

(U)ubt  that  from  Adiiui  Smith's  time  to  the  midille  nf   the 
present  century  the  vahie  of  the  precious  metals  appreciated 
and  prices  were  fallini;-.     In  1850  there  was  a  sharp  oscilla- 
tion in  the  opposite  direction,  owing  to  the  Ilussian,  Cali- 
fornian,  and  Australian  gold  discoveries.     Prices  for  ahout 
twenty  years  afterwards  continued  to  rise,  allowing  for  the 
usual  cyclical  changes   in    them.     But    now,  along  witli    a 
diminution  in  the  supply  from  the  mines,  there   is  every- 
where a  vast  increase   in  the  population  of  civilised  com- 
munities, and  a  more  rapid  multiplication  of  the  objects  of 
exchange,  so  that  prices  seem  once  more  likely  to  fall.     I 
should  say  also  that,  allowing  f(U-  almost  any  progress  in  the 
modes  of  working  the  precious  metals,  and  for  farther  dis- 
coveries like  those  of  Australia  and  California,  the  proba- 
bilities now  are  that  on  the  whole  this  insufficiency  of  the 
supply  of  the  precious  metals  is  likely  to  be  permanent. 
The  rapidity   with   which    the   Australian    and    Californian 
discoveries  have  been  used  up,  as  it  were,  is  a  novel  phe- 
nomenon, resulting  itself,  I  believe,  from  the  more  complex 
organisation  of  modern  societies.     Any  farther  discoveries  of 
a  startling  kind  will  ])robably  be  used  up  with  e(|ual  rapitlity, 
and   a  regime  of  appreciating   precious   metals  and  falling 
prices  again  set  in.     It  becomes  an  interesting  inquiry,  then, 
what  the  effect  of  such  a  condition  on  trade  will  be,  as  con- 
trasted with  the  opposite  state  in  whicli  the  supply  from  the 
mines  is  constantly  in  excess.     This  last  condition,  though 
there  has  not  been  nmch  formal  discussion  of  the  subject  iu 
all  its  bearings,  has  usually  been  assumed — from  the  time  of 
Xeuophon  downwards — to  be  more  favouralde  to  the  growtli 
of  wealth   than   the   opposite;    but   if  the  condition  is  to 
cease  to  exist,  it  may  be  as  well   to   understand  what  the 
effect  of  its  absence  and  of  the  presence  of  the  opposite  con- 
dition will  be. 


94  THE    EFFECTS    ON    TRADE 


//. 


So  much  for  the  present  importance  of  the  subject.  With 
ref'ard  to  the  assumptions  in  the  question,  and  the  limitation 
of  the  inquiry,  I  have  ])ut  it  that  an  insufficient  supply  of 
the  precious  metals  for  current  wants — that  is,  for  wear  and 
tear,  increase  of  population  and  wealth,  &c. — leads  to  a  fall 
of  prices,  and  an  excessive  supply  to  a  rise  of  prices  ;  and  I 
desire  this  to  be  assumed.  Of  course,  in  real  life,  the  effects 
of  this  one  factor  will  be  mitigated  or  aggravated  by  other 
gauses.  A  farther  economy  in  the  use  of  the  precious  metals 
as  money  would  compensate  a  failing  supply.  The  growth 
of  a  new  community,  like  the  people  of  Ptussia,  say,  in 
wealth  and  civilisation,  might,  on  the  other  hand,  absorb  a 
wholly  new  supply  of  great  magnitude.  A  new  invention 
like  the  steam-engine  might  have  the  effect  of  supplying 
communities  with  masses  of  wholly  new  articles  as  well  as 
the  old,  which  would  in  turn  become  the  objects  of  exchange. 
To  clear  the  ground,  we  assume  that  other  things  are  equal, 
and  that  an  excessive  or  insufficient  supply  of  the  precious 
metals,  sufficient  t(j  alter  prices,  comes  upon  communities  in 
equilibrium.  AVe  must  exclude  from  our  view  any  such 
indirect  effect  upon  the  prosperity  of  particular  communities 
as  that  which  results  to  a  country  producing  precious  metals 
from  the  prosperity  or  the  reverse  of  a  special  industry.  As 
far  as  money  is  concerned,  the  world  is  neither  richer  nor 
poorer  by  gold  or  silver  mining  being  productive  or  the 
reverse.  If  gold  could  suddenly  become  one  hundred  times 
more  valualjle  than  it  is,  and  prices  in  all  gold-using  coun- 
tries could  be  adjusted  with  perfect  equity  to  debtors  and 
creditors,  no  one  would  be  poorer  if  ninety-nine  out  of  a 
hundred  parts  of  gold  were  suddenly  to  be  obliterated.     The 


OF   THE    SUPPLY    OF   COINAGE.  05 

^Hu■stil)ll  lor  us  is  whether,  in  societies  like  tliose  of  Eu^hiiid 
at  the  preseut  time,  the  process  of  adjustment  will  be  such 
as  to  have  an  indirect  effect  on  the  productive  energies  of 
the  country,  and  therefore  on  their  growth  in  material 
prosperity. 

The  mere  statement  of  the  question  helps,  I  think,  to  an 
answer.  j\Iy  first  proposition  would  l)e  that  from  all  we 
know  of  modern  societies,  and  the  conditions  of  industrial 
production,  a  large  and  sudden  increase  or  decrease  of  the 
money  used  in  the  daily  transactions  of  tlie  communit}', 
whether  used  as  reserve  in  banks  or  in  active  circulation, 
would  l»e  disastrous  in  the  extreme.  Suppose  the  case  of  an 
increase :  the  result  at  first  looked  for  from  the  Australian 
gold  discoveries  would  happen  immediately,  and  there  would 
be  almost  a  social  revolution.  Debtors  would  suddenly  be- 
come rich,  the  creditors  poor.  People  with  annuities  or  such 
incomes  would  find  them  suddenly  worth  only  half  what 
they  were  before.  An  impetus  would  be  given  to  illegiti- 
mate speculation,  which  writers  like  Eicardo  and  Huskisson 
have  deplored  as  one  of  the  consequences  of  the  issue  of 
inconvertible  paper.  The  disturljance  would  certainly  ili- 
minish  production  and  accumulation  for  the  time.  On  the 
other  hand,  a  large  and  sudden  abstraction  from  the  money 
of  a  country,  if  that  were  conceivable,  W(juld  be  equally 
potent  for  mischief.  Tlie  rich  would  l)ecome  enormously 
richer,  and  the  poor  enormously  poorer.  Debtors  would  be 
ruined  all  round.  Discredit  would  become  such,  that  for  a 
time  the  business  of  such  a  community  would  almost  be 
entirely  stopped.  The  paralysis  of  industrial  energy  Mhich 
we  now  witness,  and  which  is  largely  due  to  mere  fiiint- 
heartedness,  would  be  exhibited  with  distressing  exaggeration. 
But  wliile  the  effects  of  sudden  and  great  changes  appear 
to  be  not  doubtful,  and  to  be  so  mischievous  that  it  is  not 


96  THE    EFFECTS    ON    TRADE 

wortli  considering  wlietlier  a  large  and  sudden  increase  or 
decrease  is  the  most  mischievons,  it  must  be  equally  obvious 
that  there  will  be  a  point  where  the  excess  or  insufficiency 
of  the  new  supply  may  be  so  small  that  the  effects  will  be 
imperceptiljle.  Tlie  present  is  not  a  matter  wliere  we  may 
assume  that  evil  effects  will  be  produced  in  proportion  to  the 
excess  or  insufficiency.  The  effects  are  supposed  to  result 
from  disturbance,  but  as  minor  excesses  or  insufficiencies 
produce  no  disturbance,  it  cannot  be  proved  in  this  way  that 
they  produce  ill  effects  at  all.  In  any  case,  amidst  the 
causes  of  great  fluctuations  in  business,  such  as  bad  harvests, 
great  failures,  and  the  like,  it  would  be  impossible  to  trace 
the  effects  of  so  minor  a  cause  as  this,  say  an  excess  or  in- 
sufficiency tending  to  raise  or  depress  general  prices  in  the 
course  of  a  commercial  cycle  by  2  or  3  per  cent.  only.  So 
difficult  is  the  subject,  that  it  would  perhaps  be  impossible  to 
prove  with  certainty  any  general  cliange  of  prices  to  that 
limited  extent. 

There  remains  the  case,  however,  of  an  excessive  or  in- 
sufficient infiltration  of  new  money,  which  is  neither  so 
extreme  as  we  have  first  supposed,  such  as  a  sudden  dupli- 
cation of  existing  money  or  a  sudden  reduction  of  it  by  one- 
half  would  be ;  nor  yet  so  insignificant  that  the  effects  would 
be  imperceptible.  Say  there  is  an  excess  or  defect  sufficient 
to  raise  prices  or  depress  them  in  the  course  of  a  single 
industrial  cycle  by  from  10  to  20  per  cent,  or  upwards. 
Would  such  changes  affect  the  productive  power  of  the  com- 
nmnities  affected  injuriously  or  otherwise  ?  and  would  they 
be  most  powerful  for  good  or  evil,  when  prices  rise  or  when 
they  fall  ? 

Taking  up  the  question  within  these  limits,  I  would 
answer  that  a  gradual  infiltration  of  new  money  above  what 
is  required  for  current  wants — to  take  first  the  case  of  an 


OF   THE    SUPPLY    OF    COINAGE.  97 

excess  in   tlio  supply  of  money — would,  on  the  whole,  be 
injurious  to  the  accumulation  of  wealth  in  a  community.     It 
does  not  follow  of  course  that   because  an  influx  of  new 
money,   amounting    perhaps    to    100   per   cent.,   causes   an 
economic  disturbance  of  a  serious  kind,  therefore  an  influx 
of  10  per  cent,  only  in  a  short  period  would  produce  10  per 
cent,  of  the  mischievous  consequences  of  the  addition  of  100 
per  cent.     The  difference  in  a  quantity,  in  the  economic  as 
well  as  the  material  world,  may  produce  effects  differing  not 
in  degree  but  in  kind.     But  the  gradual  infiltration  of  new 
money,  exceeding  by  even   less   than   10  per  cent,  of  the 
existing  stock  what  is  required  for  current  wants,  with  prices 
preserved  at  an   equilibrium,   would    probably   have   mis- 
chievous effects,  though  it  would   not   cause   an   economic 
disturbance.     As   modern   industrial  communities   are   now 
organised,  especially  a  community  like  that  of  England,  the 
whole  addition  to  the  new  money  would  be  placed  exactly 
where  it  is  most  dangerous.     Not  being  wanted  anywhere, 
and  the  holders  being  anxious  to  do  something  with  it,  it 
would  find  its  way,  pending   investment,  into   the   central 
banks  of  the  country,  and  immediately  increase  the  surplus 
which  these  lianks  had  to  lend.     Even  the  use  of  the  money 
to  buy  some  existing  security  w^ould  not  alter  matters  much, 
for   those  who   sold   the   security  would  in  turn  liave  the 
money   to   use.      The   surplus   would   thus   remain   in   the 
market,  tempting   to   speculation,  raising  wholesale  prices 
in  all  directions,  and  raising  or  swelling  one  of  those  waves 
of  undue  credit  which   from   time  to  time  pass  over   the 
money  market,  and  which  are  invariably  unwholesome  and 
malignant.     The  effect  would  be  different  at  different  times. 
The  nature  of  the  markets  being  such  that  at  times,  owing  to 
discredit,  unused  gold  tends   to   accumulate    in    the    banks 
until  a  new  stimulus  to  credit  is  found,  the  additional  new 
II.  H 


98  THE   EFFECTS    ON    TRADE 

money  then  coming  in  would  probably  be  unnoticed,  but  it 
must  plainly  swell  the  heap,  while  the  addition  annually 
coming  forward  will  prolong  the  stimulus  once  given  beyond 
the  period  when  it  would  naturally  be  exhausted,  i.e.  beyond 
the  period  when  exhaustion  would  ensue,  if  there  were  no 
new  supply  from  the  mines  but  what  is  necessary  to  keep 
prices  in  equilibrium.  All  this  effect  I  must  regard,  along 
with  those  who  have  denounced  the  hollow  prosperity  due  to 
a  constant  swelling  of  the  volume  of  paper  money  as  in- 
jurious. The  natural  disposition  to  undue  speculation  is 
strong  enough  and  produces  mischievous  enough  effects  in 
promotmg  waste,  misdirecting  industry,  and  deteriorating 
the  workman,  without  any  special  stimulus  being  given  to  it. 
In  given  cases  in  real  life  the  stimulus  may  fail  of  its  mis- 
chievous effect  through  the  operation  of  other  causes  which 
nip  the  speculation  in  the  bud,  but  its  tendency  seems  clear 
enough. 

The  amounts,  too,  may  be  comparatively  small  which  help 
to  produce  such  mischievous  effects.  After  considering  the 
statistics  very  carefully,  I  doubt  whether  the  annual  addition 
to  the  stock  of  coin  and  bullion  in  England  prior  to  1870 
had  for  many  years  exceeded  five  millions  a  year,  although 
up  to  1870  prices  were  believed  to  have  been  rising.  Even 
an  excess  of  five  millions  in  any  one  year,  therefore,  would 
probably  have  a  great  effect  on  wholesale  markets  and  specu- 
lation, and  such  an  excess  continued  for  several  years  could 
not  but  add  fuel  to  the  flames. 

Probably  the  speculative  excitement  of  1872  and  1873 
was  fanned  by  the  previous  accumulation  of  the  years  186G- 
70,  wliich  was  enormous,  and  happened  to  be  temporarily 
increased  by  the  first  effects  of  the  Franco-German  Avar. 
We  know  now  what  was  the  resulting  miscliief  of  this 
speculative   excitement,  although    the   worst   consequences 


OF   THE   SUPPLY   OF   COINAGE.  9f) 

were,  perhaps,  .averted  by  tlie  sudden  demand  for  gold  for 
Germany  wliicli  j^recipitated  the  colhipse  of  tlie  speculation 
in  187."3.  In  all  countries  witli  inconvertible  paper  the 
languor  and  reaction  which  succeed  the  happy  days  of  ex- 
pansion have  become  familiar,  the  condition  of  the  United 
States  in  1873  even  before  the  panic  being  a  good  illus- 
tration. 

To  take  next  the  case  of  a  deficiency  in  tlie  supply  of  new 
money  to  meet  current  wants,  with  prices  at  an  equilibrium. 
I  think  we  may  say  that  this  effect  is  also,  in  all  probability, 
injurious,  and  even  highly  injurious.  It  may  mitigate  the 
speculative  inflation  of  an  excited  period,  by  shortening  the 
stimulus  which  vrould  have  been  given  by  the  ordinary  up- 
Avard  oscillation  of  credit ;  l)ut,  on  the  other  hand,  it  is  a 
constant  source  of  new  discredit  and  of  difficult  adjustments, 
wdiicli  will  all  tend  to  contract  the  volume  of  trade  and 
paralyse  productive  energy.  In  the  ordinary  working  of  the 
money  market,  coin  is  constantly  going  out  from  and  into 
the  banks  to  meet  wants  based  on  the  actual  adjustment  of 
wages  and  prices  at  the  time.  In  a  time  of  discredit  these 
wants  are  momentarily  less,  and  in  a  time  of  good  credit  they 
are  momentarily  more  than  the  average,  but  one  year  with 
another  an  additional  new  supply  is  required  on  balance  for 
Avear  and  tear  of  coinage,  growth  of  population,  &c.  Prices 
are  in  equilibrium  if  as  a  rule  the  general  level  in  one  period 
of  good  credit  tends  to  be  about  tlie  same  as  tlie  last,  and  the 
intermediate  oscillation  downwards  is  also  to  about  the  same 
level  as  in  the  previous  period.  But  when  the  new  supply 
falls  short,  the  tendency  of  the  downward  oscillation  is  exag- 
gerated, just  as  in  the  case  of  an  excess  of  new  money  the 
stinudus  to  inflation  is  prolonged.  The  renewed  stinndus 
upwards  nuist  also  be  delayed.  The  result  is  a  disagreeable, 
irritating   contraction,   producing  a   despondency   which    is 

11  -2 


100  THE    EFFECTS    ON    TRADE 

itself  paralysing.     I'eople  say  there  seems  no  limit  to  the  fall 
in  prices. 

I  think  we  may  say,  too,  that  a  general  fall  of  wholesale 
prices  amounting  to  10  or  15  per  cent,  in  the  course  of  an 
industrial  cycle,  in  addition  to  the  usual  oscillations  inci- 
dental to  that  cycle,  would  have  a  great  effect  in  adding  to 
the  insolvencies  of  the  depressed  period.  Could  we  suppose 
the  fall  taking  place  gradually,  it  is  hardly  possible  that 
traders  would  be  much  affected.  A  difference  in  a  year  of 
1  or  1^  per  cent,  in  the  prices  at  which  they  buy  and  at 
which  they  sell,  compared  with  what  they  would  otherwise 
have  been,  can  hardly  be  material  to  traders.  Their  expec- 
tations of  profit  are  based  on  much  wider  differences  than 
this,  and  though  they  might  suffer  a  little  from  the  gradual 
dwindling,  no  one  is  likely  to  be  ruined  who  would  not 
otherwise  be  ruined.  Unfortunately,  great  changes  of  prices 
are  apt  to  occur  suddenly,  and  the  additional  fall  due  to 
contracted  money  coming  suddenly  to  help  the  cyclical  fall 
due  to  discredit,  might,  and  probably  would,  have  a  great 
effect  in  extending  the  area  of  insolvency.  People  who 
would  have  struggled  through  are  bowled  over  by  the  extra 
difference  ;  their  fall  entails  that  of  others  ;  and  so  the  area 
of  depression  is  increased.  The  residting  additional  stoppage 
of  industrial  production  must  be  serious,  though  it  would  be 
impossible,  of  course,  in  real  life  to  trace  the  exact  effect  of 
each  stage  in  a  fall  of  prices.* 

*  In  point  of  fact  the  history  since  1879  has  been  one  of  a  brief 
inflation,  checked,  as  I  behevo,  hy  the  scarcity  of  gold;  but  the 
subsequent  fall  of  jji-ices  has  not  as  yet  been  accompanied  by  unusual 
failures.  Failures  have  rather  diminished.  The  check  to  inflation 
would  appear  for  the  present  to  have  prevented  failures.  But  it 
remains  of  course  a  possibility  that  in  somewhat  different  circum- 
stances the  aggravation  of  a  cyclical  fall  of  prices  by  a  contraction  of 
the  gold  supply  may  lead  to  more  failures  than  what  would  otherwise 
occur. 


OF   THE   SUPPLY    OF    COINAGE.  101 


III. 


As  compared,  then,  with  a  state  of  tilings  in  which  there  is 
just  enougli  new  money  to  keep  prices  at  an  equilibrium, 
that  is,  osciHating  between  the  same  extremes  from  cycle  to 
cycle,  we  are  led  to  conclude  that  an  excess  or  insufficiency 
of  current  money  for  new  wants,  when  that  excess  or  in- 
sufficiency is  at  all  considerable,  although  not  of  an  extreme 
kind,  must  be  injurious.  It  remains,  however,  to  ask 
whether  excess  or  insufficiency  of  that  character  is  most 
injurious,  and  I  am  inclined  to  think,  though  it  is  difficult 
to  measure  the  extent  of  the  evils  in  either  case,  yet,  from 
their  nature,  those  arishig  from  an  insufficient  supply  of  new 
money  must  be  the  worst.  A  speculative  period,  whatever 
may  be  its  other  defects,  is  favourable  to  production  of  some 
kind.  Wrong  things  may  often  be  produced,  but  the  indus- 
trial machine  is  kept  going,  and  amidst  all  the  misdirection, 
rio^ht  thinas  in  abundance  must  also  l)e  i:)roduced.  A  fre- 
quent  misdirection  of  a  speculative  mania  is  in  the  creation 
of  fixed  Avorks  which  are  not  at  the  time  remunerative  to 
those  who  make  them  ;  but  where  the  growth  of  population 
is  rapid,  the  fixed  works  thus  produced  in  excess  are  fre- 
quently found  to  have  been  merely  premature.  A  period  of 
languor  follows  in  which  production  is  at  a  minimum,  but  a 
certain  benefit  remains  to  be  enjoyed  from  the  past  produc- 
tion. On  the  other  hand  the  contraction  of  business  and 
multiplication  of  insolvencies  which  constantly-falling  prices 
produce,  seem  to  be  without  similar  compensations.  The 
tendency  is  not  merely  to  keep  the  energies  of  a  community 
from  being  misdirected,  but  to  limit  the  production  of  the 
right  things  as  well.  Possibly  there  may  be  a  compensating 
gain  which  it  would  lie  wholly  impossible  to  trace  in  the 


102  THE    EFFECTS   ON    TRADE 

enforced  industiy  aud  prudence  of  a  community  constantly 
struo'slinw  with  falling  prices.  The  education  in  the  end 
will  be  wholesome.  But  at  the  time  there  is  a  check  to  pro- 
duction which  does  not  exist  in  periods  of  rising  prices. 

It  is  just  possible,  however,  that  at  a  time  of  falling  prices, 
accumulation  may  be  less  checked  than  production.  The 
production  may  be  less,  but  consumers  being  more  careful 
the  accumulation  may  remain  as  great  as  ever.  A  time  of 
falling  prices  may  thus  not  be  as  unfavourable  to  the  growth 
of  a  community  in  wealth  as  it  is  to  their  whole  prosperity. 
I  doubt  whether  any  community  can  accumulate  so  much 
with  production  at  a  minimum  as  with  production  at  a 
maximum,  but  it  is  necessary  that  the  distinct  nature  of  the 
questions  of  accumulation  and  general  prosperity  should  l_»e 
kept  in  mind.  Although  it  could  be  shown  that  accumula- 
tion is  as  great  with  falling  or  rising  prices  as  with  prices  in 
equilibrium,  it  would  not  follow  that  it  is  indifferent  whether 
prices  do  rise  or  fall.  The  differences  in  the  means  of 
material  enjoyment  may  be  very  considerable,  and  should 
be  taken  into  account. 

The  conclusion  to  which  I  have  come  seems  to  support  the 
general  opinion  of  tlie  desirableness  of  having  a  money  in 
use  which  does  not  change  in  value  from  period  to  period 
beyond  the  X)oints  within  which  changes  of  credit  produce 
the  usual  oscillations.  I  should  like,  therefore,  to  qualify 
what  I  have  said  by  the  addition  that  probaljly  the  matter  is 
not  of  first  importance  compared  with  other  hindrances  or 
facilities  to  economic  production.  Too  much  must  not  be 
made  of  the  effect  on  industrial  production  of  changes  in  the 
amount  of  money.  Compared  with  such  influences  as  good 
or  bad  harvests,  wars,  and  the  like,  or  the  waste  caused  by 
indulgence  in  alcohol  or  other  extravagances,  the  changes  in 
money,  except   those  of  the   most  extreme   kind,  must   be 


OF    THE   SUPPLY    OF    COINAGE.  lOo 

insignificant.  The  desirableness  of  having  an  nnehanging 
money  is  thereiore  only  relative.  It  is  not  an  object  to  l)e 
sought  at  all  hazards,  but  a  very  secondary  one.  It  must 
not  be  sought,  especially,  at  the  risk  of  destroying  the  ends 
for  which  a  connnunity  has  a  money  at  all.  If  the  world  in 
i'uturc  is  to  have  permanently  rather  a  deficient  supply  of 
the  precious  metals,  it  is  better  to  face  the  evil  with  a 
standard  money  such  as  that  of  England  now  is,  however  it 
may  appreciate,  rather  than  attempt  a  new  experiment.  It 
would  be  out  of  place  to  go  into  a  statistical  argument  here, 
but  I  should  doubt  if  even  a  general  fall  of  10  per  cent,  in 
prices  is  probable  within  the  next  ten  years  owing  to  a 
scarcity  of  gold,  provided  there  are  no  new  extraordinary 
demands,  and  without  a  fall  of  tliat  extent  in  ten  years  it  is 
doubtful  whether  the  resulting  evils — at  least  so  far  as  the 
accumulation  of  wealth  and  general  prosperity  are  concerned 
— are  likely  to  be  appreciable.  If  gold  is  to  appreciate  in 
future  at  no  greater  rate  than  this,  I  cannot  admit  that  the 
consequences  will  be  at  all  fatal  to  production. 

It  is  equally  clear,  however,  that  if  it  is  preferable  to  abide 
by  a  good  standard  money,  and  face  the  evils  of  appreciation 
and  depreciation,  to  which  it  is  naturally  subject,  it  is  unde- 
sirable to  produce  artificially  the  evils  which  do  result  from 
appreciation  or  depreciation  when  at  all  sensible.  This  has 
long  been  admitted,  I  may  say  almost  universally,  by  the 
great  English  writers  on  currency.  Against  all  the  argu- 
ments that  inconvertible  paper  will  make  money  abundant, 
raise  prices,  and  stimulate  production,  they  have  set  their 
faces  steadily.  And  their  objections  apply  equally  to  an}' 
arrangement  for  making  metallic  money  abundant  which  is 
the  basis  of  the  most  commonly  used  arguments  of  bi- 
metallists.  They  also  apply  of  course  to  all  projects  for  arti- 
ficially raising  the  denomination  of  a  money  of  the  precious 


104    THE    EFFECTS    ON   TRADE    OF   THE   SUPPLY   OF    COINAGE. 

metals.  A  forced  appreciation  of  the  currency  of  a  country 
will  have  many  injurious  consequences,  apart  from  all  other 
objections  there  may  be  to  the  measure ;  and  these  consequences 
will  be  injurious  m  proportion  to  the  degree  of  economic 
advancement  which  a  country  happens  to  have  attained. 
In  a  country  like  England  they  would  be  intolerable,  and  a 
sudden  appreciation  of  money  by  10  or  20  per  cent,  in  such 
a  country  without  adequate  motive  is  to  be  deprecated. 
Such  an  adequate  motive  may  be  admitted  where  the  pro- 
blem has  been  to  bring  inconvertible  paper  which  has  got  to 
a  discount  up  to  par,  and  then  to  resume  specie  payments  ; 
but  without  a  motive  like  this  an  appreciation  of  the  money 
of  a  country  forced  on  by  a  Government  is  simply  a  measure 
for  disabling  the  productive  powers  of  the  people,  and 
making  them  poorer  than  they  would  otherwise  be,  while  it 
is  liable,  of  course,  to  all  the  objections  which  exist  to  any 
measure  that  changes  the  contracts  between  individuals. 
[1879.] 


(     105     ) 


lY. 

BANK   EESERVES. 

In  a  recent  animated  correspondence  in  the  money  market 
columns  of  the  Times  on  the  subject  of  "  Bankers'  reserves," 
almost  all  the  contributors,  including  present  and  past  bank 
managei's,  private  bankers  and  others,  have  acknowledged 
that  the  banking  system  of  Lombard-street,  taken  in  the 
aggregate,  has  not  the  strength  that  would  be  given  l)y  an 
adequate  cash  reserve.  But  dispute  arises  as  to  where  the 
blame  of  the  defect  is  to  be  cast,  representatives  of  the 
banks  outside  throwing  the  responsibility  on  the  Bank  of 
England,  and  others  on  these  outside  banks  themselves.  Our 
own  view  inclines  to  the  latter  side  ;  but  the  subject  deserves 
the  most  careful  discussion,  and  we  think  it  will  be  useful 
to  explain  the  facts  and  their  various  bearings  while  avoiding, 
if  possible,  any  heated  controversy.  The  matter  is  evidently 
one  for  calm  and  scientific  treatment,  while  the  time  [1881] 
is  also  suitable  for  discussion  and  for  action,  seeing  that 
credit  is  good  and  there  is  no  fear  of  engendering  uneasiness 
in  the  public  mind,  as  there  might  be  when  the  money 
market  is  disturbed. 

To  make  the  controversy  popularly  intelligible  wo  nnist 
go  back  to  the  very  elements  of  monetary  science  and  bank- 
ing practice.  There  are  two  principles  which  all  will  uniler- 
stand ;  first,  the  economy  of  money  and  of  capital  in  its 
widest  sense,  which  is  effected  by  means  of  deposit  banking 
— by  people  placing  their  working  cash,  or  cash  which  is 


106  BANK    RESERVES. 

awaiting  investment,  in  banks,  and  by  the  banks  employing 
the  surplus  over  and  above  what  is  necessary  to  meet  the 
varying  wants  of  their  customers  from  day  to  day  ;  and 
second,  the  necessity  which  is  laid  on  bankers,  especially  on 
bankers  who  conduct  their  business,  as  in  England,  on  the 
principle  of  undertaking  to  repay  the  money  deposited  with 
them  at  call  or  short  notice,  of  not  only  employing  the  money 
in  such  a  way  as  to  be  readily  convertible  into  cash,  but  of 
keeping  such  a  sum  in  actual  cash  somewhere  that  no  one  can 
have  a  reasonable  doubt  of  any  actual  demand  for  cash  which 
is  at  all  likely  to  arise  being  met,  and  more  than  met.  As 
regards  the  first  principle  there  is,  of  course,  absolute  agree- 
ment. A  given  quantity  of  the  precious  metals  is  made  to 
do  infinitely  more  work  by  means  of  banks  than  it  would 
do  if  there  were  no  banks,  while  by  the  refinement  of  banker's 
Clearing  Houses  and  cheques  a  cheap  and  inexpensive  mecha- 
nism sufiices  for  the  secure  settlement  of  a  volume  of  trans- 
actions which,  perhaps,  could  not  take  place  at  all  without  it. 
The  magnitude  of  modern  business  is,  in  fact,  rendered 
possible  only  by  means  of  a  banking  system  like  that  which 
exists  in  this  country  and  in  the  United  States,  and  in  a  less 
developed  form  in  France  and  Germany.  As  regards  the 
second  principle,  there  is  also  no  disagreement  in  theory. 
Every  writer  of  authority,  and  every  banker  in  practice,  so 
far  as  we  know,  acknowledges  the  necessity  of  an  actual  store 
of  cash  somewliere  in  every  banking  system.  It  has  not 
always  been  so,  banking  having  grown  up  gradually,  and 
each  banker  at  first  having  trusted,  and  rightly  trusted,  to 
keeping  sufficient  sums  in  his  own  till  for  ascertained  wants, 
and  sufficient  securities  which  he  could  sell  for  cash  if  there 
was  any  run  upon  him  ;  and  the  question  of  whether  that  cash 
could  be  obtained  at  all  not  having  become  a  practical  one 
until  everybody  kept  a  banker.     But  practically  for  many 


BANK   KESERVES.  107 

years  tlie  necessity  of  a  cash  reserve  somewliei-e  has  been 
acknowh'd^ed  l)y  Ijankers,  and  especially  by  tlie  leading  bank 
ill  tliis  country,  the  Bank  of  England;  and  since  Mr. 
J'.agehot's  "Lombard-street"  the  recognition  oi' this  necessity 
has  become  part  of  the  accepted  theory  of  banking.  Its 
soundness  is  mathematically  demonstrable.  You  cannut 
have  a  class  of  men  in  a  business  community  undertaking 
vast  liabilities  to  pay  in  cash  at  call  or  short  notice  without 
some  guarantee  beforehand  that  sufficient  cash  will  be  forth- 
coming for  all  }n-oljal)le  demands.  It  is  ])luin  tliat  if  an 
accident  should  arise  to  make  all  the  depositors  want  cash  at 
cmce  they  could  not  have  it ;  the  thing  would  be  an  impossi- 
bility ;  but  probable  demands  can  be  provided  for,  with  a 
margin  over,  and  that  is  all  that  is  necessary  to  make  a 
Ijanking  system  safe.  But  while  the  theory  is  accepted  there 
are  all  sorts  of  differences  about  the  application,  as  the 
present  controversy  bears  witness.  How  much  reserve  is  to 
])e  kept,  and  who  is  to  keep  it,  are  unsettled  problems  in  tht; 
existing  practice  of  the  English  money  market.  The  Bank  of 
England  is  to  blame,  say  some ;  the  banks  outside,  say  others  ; 
while  a  few  profess  to  be  quite  satisfied  with  things  as  they 
are.  There  is  a  whole  class  of  institutions  in  Lombard-street 
— the  discount  houses — whose  business  would  be  vitally 
altered  if  the  existing  practice  were  to  be  changed. 

As  to  whether  the  existing  practice  is  satisfactory,  we 
think,  also,  there  can  be  no  dcjubt.  There  is  practically  no 
reserve  of  actual  casli  anywhere  in  this  country  in  the  sense 
in  which  the  word  "  reserve  "  is  properly  used,  except  what 
is  called  the  reserve  in  the  banking  department  of  the  Bank 
of  England,  which  nuw  amounts  to  the  sum  of  £10,800,000. 
If  any  merchant  or  foreign  banker  in  this  country  wants  a 
hundred  thousand  sovereigns  to  send  to  Egypt,  or  Brazil,  or 
the  Cape,  or  the  United  States,  the  only  place  where  he  can 


108  BANK   EESEKVES. 

get  the  sum  is  the  Bank  of  England.     He  may  draw  a  cheque 
on  his  own  banker,  but  the  banker  draws  a  cheque  in  turn 
either  directly  on  the  Bank  of  England,  or  indirectly  through 
some  other  banker  or  discount  house  which  draws  on  the 
Bank  of  England,  and  so  the  want  is  supplied.     What  is  a 
still  more  serious  matter,  if  there  is  a  run  upon  any  bank,  or 
apprehended  run,  it  is  the  same  store  which  is  drawn  upon. 
A  banker  in  the  provinces  may  not  even .  have  a  banking 
account   with  the  Bank  of  England,  but  he  draws  on  his 
London  agents,  perhaps  supplying  them   with  securities  to 
sell  on  the  Stock  Exchange,  and  the  cash  is  actually  taken  in 
the  end  from  the  Bank  of  England.     The  London  agent  if  he 
holds  a  balance  at  the  credit  of  the  country  banker  draws  a 
cheque  directly  and  obtains  notes  and  coin  from  the  Bank 
of  England  which  he  sends  to  the  latter ;  if  securities  have 
first  to  be  realized,  the  Stock  Exchange  dealer  who  purchases 
gives  a  cheque  on  his  own  banker,  who  in  turn  draws  on  the 
Bank  of  England  if  tlie  sum  is  of  any  magnitude,  and  so 
the    drain    of    cash,    however    roundabout    the    operation, 
ultimately  falls  upon  the  Bank  of  England.     Very  likely, 
indeed,  the  Stock  Exchange  dealer  has  to  borrow  the  money, 
which  he  does  of  his  own  banker,  the  banker  in  turn  calling 
in  money  from  the  discount  house  and  the  latter  borrowing 
from  the  Bank  of  England,  so  that  the  strain,  by  our  present 
practice,  falls  in  a  double  way  upon  the  latter  institution. 
People  who  do  not  even  keep  accounts  with  it  can  compel 
others  to  borrow  from  it,  and  so  they  obtain  the  cash  they 
want.     In  these  ways  the  cash  kept  in  the  banking  depart- 
ment of  the  Bank  of  England,  which  is  less  than  eleven 
millions   at    the    present   moment,   is    the   sole    guarantee 
for   the   immense  liabilities  of  the  banking  system  of  the 
country ;  and   to   say  this  is   to   prove   the   defect   of  the 
present    system.      The    liabilities   are   to   be   reckoned   by 


BANK    RESERVES.  109 

]uiii(ln'(ls  (if  millions.     Some  years  ago  the  total  deposits  of 
the    banks    of    the    United    Kingdom    were    reckoned    at 
£600,000,000,  and  they  must  now  Ije  more,  while  there  is  an 
immense  contingent  liability  through  the  facility  with  which 
people  can  borrow  on  security,  and  so  get  money  placed  to 
their   credit   against   which   they   can  draw   cheques.     The 
deposits  of  the  various  l)anks  with  head  offices  in  London 
alone  exceed  £100,000,000.     To  have  £10,000,000  in  actual 
cash  for  all  this  fabric  of  credit  is  palpably  too  little.     Nor  is 
this  mere  theory.     Three  times  since  1844, — in  1847,  in  1857, 
and  again  in  1866 — the  banking  department  of  the  Bank  of 
England  has  been  nearly  exhausted  and  there  has  been  great 
apprehension  and  panic,  and  although  the  amount  of  the 
reserve  when  apprehension  began  was  less  than  £10,000,000, 
it  cannot  be  said  that  it  was  less  than  it  is  now  relatively  to 
the  engagements  of  the  time.     Since  1866,  the  date  of  the  last 
panic,  the   volume   of  transactions   has   grown   immensely. 
More  recently,  in    1878,  after   the   failure   of  the  City  of 
Glasgow  Bank,  there  was  a  steady  pull  from  the  country 
bankers  upon   the  reserve  of  the  Bank  of  England,  which 
would  undoubtedly  have  given  rise  to  similar  apprehension, 
and  which  it  would,  perhaps,  have  been  impossible  to  meet, 
but  for  the  Continental  exchanges  Jjoing  in  our  favour  at 
the    time    and    the    money   market    generally   easy.      The 
liability  of  the  reserve  under  our  present  system  to  sink  to 
£10,000,000  or  less  is  in  fact  a  constant  source  of  irritation 
and  uneasiness  in  the  market  and  is  an  utterly  indefensible 
defect  of  that  system. 

But  who  is  to  blame  ?  And  what  remedy  is  there  to  be  ? 
In  answering  this  question  we  come  to  the  gist  of  the  present 
controversy,  which  becomes  almost  too  technical  for  jwpular 
handling ;  but  we  are  not  without  hope  of  being  understood. 
But  for  some  peculiarity  in  our  system,  we  think,  no  one 


110  BANK   RESERVES. 

"svoiild  question  at  all  tlie  responsibility  of  the  leading  banks 
of  the  metropolis,  whether  joint  stock  or  private.     Witli  the 
exception   of  a   supremacy  or  suzerainty  lodged  "svith  the 
Bank  of  England,  which  we  shall  notice  presently,  they  are 
at  the  head  of  a  hierarchy  of  banks  ;  they  are  the  bankers  of 
all  other  banks  throughout  the  country,  partly  in  a  direct 
and  partly  in  an  indirect  manner ;  upon   them,  if  any,  but 
for  the  Bank  of  England,  the  brunt  of  any  panic  or  shock  to 
credit  would  fall.     If  there  were  no  such  hierarchy  as  what 
actually   exists,    each   bank,  whether  in  the  country  or  in 
London,   Avould  have  to  stand  by  itself;  but  when  metro- 
politan banks  accept  the  agency  of  other  banks  and  become 
the  bankers  of  banks  they  accept  the  full  responsibilities  of 
the  position,  one  of  which  is  the  provision  of  actual  cash  for 
any  emergency.     There  is,  of  course,  no  written  law  to  this 
effect,  but  usage  in  such  matters  is  even  more  imperative 
than  written  rule.     We  have  not  a  word  to  say,  we  may 
explain,   against   this   hierarchical   system   itself.     On   the 
contrary,  it  appears  to  us  a  great  economy  that  there  should 
be  a  system  of  principal   and   dependent   banks,    such   as 
appears  to  grow  up  naturally  in  every  country  where  the 
banking  system  is  at  all  developed.     But  the  essence  of  such 
a  system  is  that  the  principal  banks  should  accept  the  re- 
ponsibility  of  either  keeping  a  reserve  themselves  or  getting 
it  kept  somehow  ;  and  hence  as  the  cash  reserve  of  the  Eng- 
lish banking  system  is  generally  acknowledged  to  be  too  small, 
and  is  palpably  too  small,  th(;    defect  would  be   naturally 
charced  on  the  leading  London  banks,  if  there  were  no  other 
peculiarity  in  our  system.     But  for  such  peculiarity  no  one 
would  even  dream  of  questioning  their  responsibility.     The 
Associated  Banks  of  iSTew  York  actually  do  keep  their  own 
reserve,  and  so  would  the  London  banks  in  the  absence  of 
any  peculiarity  in  the  English  money  market. 


BANK   RESERVES.  1  1  1 

But  there  is  a  peculiarity  iu  ouv  market,  and  in  this  lies 
Loth  the  secret  of  tlie  actual  weakness  of  our  reserve  and  the 
unwillin,!:,niess  of  the  leading  London  banks  to  accept  their 
responsibility.  Side  by  side  with  tlieni,  and  beginning  in 
the  days  when  there  were  no  joint-stock  l)anks,  and  wlien  tlio 
banking  world  of  London  was  relatively  much  smaller  com- 
pared with  the  Bank  of  England  than  it  is  now,  there  has 
grown  np  a  set  of  institutions — the  discount  houses  and  bill- 
brokers— avowedly  keeping  no  cash,  professedly  dependent 
on  the  Bank  of  England  when  they  do  want  cash,  and  yet 
transacting  what  is  really  banking  business  to  an  enormous 
extent — that  is  receiving  deposits  at  call  or  short  notice  on 
the  one  hand  and  discounting  bills  or  making  advances  on 
securities  on  the  other  hand.  These  institutitions  in  the  old 
times  were,  in  fact,  another  step  in  the  banking  hierarchy, 
connecting  the  various  banks  in  the  country  with  the  Bank 
of  England,  and  in  that  way  making  the  latter  bank  supreme 
over  all  the  others  and  the  possessor  of  the  sole  reserve. 
The  idea  itself  was  not  an  unsound  one,  tending  to  effect  an 
even  greater  economy  of  cash  than  if  all  the  leading  banks 
of  a  metropolis  were  to  keep  their  own  reserves ;  but  the 
effect  has  been  that  with  the  gi-owth  of  the  banking  system 
generally  the  leading  London  banks,  wliich  have  been  grow- 
ing up  into  a  position  of  equality  with  the  Bank  of  England 
as  far  as  banking  business,  apart  from  note  issues,  is  con- 
cerned, and  perhaps  even' into  a  position  of  superiority  to  the 
Bank  of  England,  have  allowed  themselves  to  remain  de- 
pendent upon  the  discount  houses  and  bill-brokers,  just  as 
when  they  were  small  and  dependent  banks.  They  deposit 
their  surplus  cash  with  these  discount  houses  and  bill-brokers 
just  as  if  they  were  dependent  and  not  leading  banks,  and 
treat  the  money  so  deposited  at  call  as  if  it  were  cash,  which 
would  be  quite  a  proper  thing  to  do  if  they  were  dependent  ; 


112  BANK   RESERVES. 

but  which  appears  to  be  quite  improper  and  dangerous, 
looking  to  their  real  position  in  the  banking  hierarchy. 
Tlie  effect  necessarily  is  that  our  leading  banks  make  them- 
selves virtually  dependent  on  the  Bank  of  England.  They 
deposit  with  banks  which  are  avowedly  dependent  on  the 
Bank  of  England,  and  so  they  in  turn  are  dependent.  This 
would  probably  answer  well  enough  even  now  if  the  Bank 
of  England  could  and  would  undertake  to  keep  an  adequate 
reserve  for  them,  but  the  business  of  the  discount  houses 
and  bill-brokers  has  itself  grown  so  large  in  relation  to  that 
of  the  Bank  of  England  that  this  seems  no  longer  possible. 
Instead  of  remaining  an  overwhelmingly  great  institution 
with  a  crowd  of  little  banks  and  bill-brokers,  from  whom  it 
takes  a  varying  amount  of  business,  dependent  upon  it,  the 
Bank  of  England  has  been  jostled  out  of  the  market  by  its 
big  competitors,  and  only  obtains  a  small  margin  of  business 
when  the  reserve  of  cash  in  the  market  falls  short  and  the 
discount  houses  and  bill-brokers  resort  to  it  for  advances. 
The  Bank  of  England,  in  other  words,  cannot  keep  a  suf- 
ficient reserve  for  all  the  wants  of  our  banking  system, 
because  it  has  not  the  ordinary  business  and  cash  of  the 
market.  It  is  sometimes  said,  indeed,  that  the  Bank  of 
England  employs  the  bankers'  money,  for  they  all  keep 
accounts  with  it  for  Clearing  House  purposes,  and  the  money 
so  deposited  with  the  Bank  is  treated  by  it  like  any  other 
deposit ;  but  we  fail  to  see  how  this  proves  that  the  Bank 
fails  to  discharge  its  legitimate  obligations.  Strictly  speak- 
in",  the  cash  deposited  with  it  is  not  the  reserve  of  these 
banks,  but  money  deposited  for  a  special  purpose,  and  it  is 
not  to  be  expected  to  keep  any  one's  cash  for  nothing.  We 
come  round  then  to  the  fact  that  the  leading  London  bankers, 
being  primarily  responsible  for  keeping  a  cash  reserve,  fail  to 
do  so,  by  making  themselves  dependent  on  the  bill-brokers  and 


BANK    RESERVES.  113 

the  Uank  of  England  just  as  if  tliey  were  depeiulfiit  banks 
themselves,  which  they  are  not  and  cannot  be. 

Strictly  speaking,  of  course,  the  Bank  of  England  is  a 
partner  with  the  discount  houses  and  the  outside  banks  in 
maintaining  this  vicious  system.  By  conforming  to  the 
usage  of  always  k'nding  to  the  discount  houses  and  bill- 
brokers  when  they  are  pinched,*  it  releases  the  outside  banks 
from  the  necessity  under  which  they  would  otherwise  lie  of 
kee[)ing  a  cash  reserve  for  themselves,  and  it  undertakes 
virtually  to  enable  these  outside  banks  to  act  as  dependent 
banks,  while  it  has  not  the  means,  as  we  have  seen,  of 
enabling  them  to  do  so.  But  the  partnership  of  the  Bank  of 
England  in  the  matter  is  especially  difficult  to  throw  off. 
The  usage  of  supplying  the  discount  houses  and  bill-brokers 
in  time  of  need  is  of  old  standing,  and  if  the  Bank  of  P2ngland 
were  to  seek  to  depart  from  the  usage  it  would  incur  great 
odium.  Perhaps  it  could  only  do  so  by  letting  a  discount 
house  with  good  securities  to  offer  stop  payment,  and  in  a 
system  of  credit  such  action  would  be  impossible.  The 
Bank  of  England  would  be  accused  of  endangering  the  credit 
of  the  country  itself,  and  in  the  popular  view  it  would  be  no 
excuse  that  it  had  given  fair  warning  of  its  change  of  policy. 

If  this  account  of  the  matter  be  correct,  the  question  of 
a  remedy  really  requires  very  little  discussion.  The  institu- 
tions which  are  primarily  responsible,  as  we  have  seen,  are 
the  leading  London  banks,  and  thoy  have  the  remedy  in 
their  own  hands.  All  they  have  got  to  do  is  to  cease 
depositing  as  much  money  as  they  now  do  with  the  discount 
houses  and  bill-brokers,  and  they  can  compel  the  mainte- 

*  A  few  years  ago,  since  this  paper  was  written,  the  Bank  of 
England  restricted  its  acconimodation  to  tlio  discount  lionscs  in  tliis 
respect.  But  not  sufficiently  .so,  I  fear,  to  warrant  a  modification  of 
the  text. 

II.  I 


114  BANK    RESERVES. 

nance  of  a  larger  reserve.  To  maintain  the  economy  of  the 
present  system  they  ■would  do  so  by  increasing  their  deposit 
with  the  Bank  of  England ;  l)ut  if  they  have  any  fear  of 
the  Bank  of  England  lending  the  money,  and  not  keeping- 
sufficient  cash,  their  simple  plan  would  be  to  lock  up  the 
money,  either  in  a  separate  vault  at  the  Bank  of  England, 
as  some  correspondents  have  suggested,  the  Bank  receiving- 
compensation  for  the  work,  or  in  a  vault  of  their  own, 
entirely  under  their  own  control.  No  doubt  one  result 
would  be  that  these  banks  would  have  to  reduce  the  divi- 
dends to  their  shareholders  or  the  allowances  they  pay  to 
their  depositors ;  but  that  they  would  have  to  adopt  one  or 
other  of  these  alternatives,  and  especially  that  they  would 
have  to  adopt  the  latter,  is  rather  an  argument  for  their 
keeping  their  own  cash  reserves.  The  practice  of  banks 
paying  interest  on  deposits  has  grown  to  a  dangerous  height. 
Because  they  pay  interest  they  are  forced  to  invest  and  lend 
"  up  to  the  hilt "  so  as  to  earn  the  interest ;  and,  as  was  seen 
in  1875,  the  consequences  are  sometimes  disastrous.  A 
smaller  business  with  larger  cash  reserves  would  be  a  better 
thing  for  some  of  oar  great  banks  than  business  on  the 
present  scale  with  its  defect  of  an  insufficient  cash  reserve. 
The  present  would  be  a  good  time  for  altering  the  vicious 
practice  wliich  is  now  followed.  Let  the  leading  banks  meet 
together,  agree  how  to  keep  a  cash  reserve  for  themselves, 
and  put  an  end  to  their  present  unworthy  and  unsatisfactory 
dependency  on  the  discount  houses  and  bill-brokers,  and, 
tln-ough  them,  on  the  Bank  of  England. 

There  are,  of  course,  other  questions  involved  in  this 
discussion,  such  as  the  right  of  note  issue.  If  all  banks,  for 
instance,  were  free  to  issue  notes  on  demand,  instead  of  the 
Bank  of  England  and  a  few  provincial  banks  enjoying  a 
restricted   monopoly,  the  resources   of  the   leading   banks. 


BANK   RESEnVES.  11") 

participating  in  the  note-issue,  might  be  so  inci-eascd  that 
they  could  better  afford  to  keep  a  large  cash  reserve.  Tliis 
is  only  one  of  many  conceivable  suggestions  that  miglit  be 
made.  But  on  such  issues  we  give  no  opinion  at  present. 
We  have  been  dealing  with  the  question  in  a  })ractical  sjtirit, 
and  any  changes  involving  legislation,  and,  as  a  preliminary 
to  legislation,  the  revival  of  currency  discussions,  are,  of 
course,  not  within  the  range  of  practical  consideration.  The 
one  thing  now  to  keep  in  view  is  that  the  defect  of  the 
present  system  is  curable  in  the  most  simple  manner  by 
those  who  are  mainly  responsible  for  that  defect.     [1881.] 


I  2 


(     116     ) 


Y. 

THE  FOEEIGX  TEADE   OF  THE  UNITED 

STATES. 

In  the  recent  discussions  about  "  fair  trade,"  one  of  the 
stock  arguments  of  the  fair  traders  has  been  the  marvellous 
growth  of  the  foreign  trade  of  the  United  States.  In  some 
way  or  other  it  seems  to  be  assumed  that  the  growth  of  the 
foreign  trade  of  a  country  is  a  complete  index  of  its  pros- 
perity, and  that  this  prosperity  can  be  assigned  without 
more  ado  to  the  measures  and  policy  of  the  Government, 
no  reference  being  made,  as  one  would  naturally  expect, 
to  the  special  trade  causes,  the  demand  on  one  side  and 
the  natural  means  of  su]3ply  on  the  other,  which  must 
always  be  more  important  than  the  mere  action  of  govern- 
ments. But  while  the  folly  of  this  fair-trade  argument  is 
apparent  on  the  surface,  the  facts  on  which  it  is  based 
appear  really  to  be  most  remarkable,  and  to  call  for  some 
account  of  their  real  nature  and  causes.  The  growth  of 
the  foreign  trade  of  the  United  States  in  recent  years,  as 
of  so  much  else  in  that  country,  has  been  one  of  wonderful 
rapidity. 

If  we  go  back  to  1840  and  take  the  amounts  of  the  trade 
at  ten  years'  intervals  from  that  date  we  get  the  following 
record  of  progress : — 


THE    FOREIGN    TRADE    OF   THE    UNITED   STATES. 


117 


Statement  of  the  Foreign  Trade  of  the  United  States  in  the 
Years  ISIO,  1850,  18G0, 1870  and  1880  (in  thousands  of  pounds).* 


Imports  of 

Exports  of 

"i  ear. 

merchandise. 

merchandise. 

1840 

19,1)52 

£ 

24,734 

1850 

34,702 

28,875 

i860 

70,723 

66,715 

1870 

87,192 

78,554 

1880 

133,591 

167,128 

Since  1840  the  increase  in  the  imports  amounts  to  about 
£114,000,000  and  in  the  exports  to  about  £143,000,000,  the 
percentage  increase  in  the  one  case  being  about  600  per  cent., 
and  in  the  other  about  570  per  cent.  The  percentages  of 
increase  in  a  country  like  the  United  States  are  not,  perhaps, 
to  be  regarded,  the  population  increasing  so  fast  and  the  total 
foreign  trade  being  still  less  than  that  of  the  United  King- 
dom, where  the  population  is  only  between  three  and  four- 
fifths  of  that  of  the  United  States ;  but  the  amount  of  the 
increase  speaks  for  itself.  The  greater  part  of  the  increase 
was  in  the  last  decade — viz.,  between  1870  and  1880,  when 
the  imports  increased  £46,000,000,  or  more  than  50  per 
cent,  and  the  exports  £89,000,000,  or  more  than  100  per 
cent.,  on  the  totals  of  1870.  Between  1860  and  1870  there 
was  comparatively  little  progress — the  consequence,  it  may 
be  assumed,  of  the  great  civil  war  which  raged  in  the  interval. 

In  dealing  with  the  totals  of  a  country's  foreign  trade,  the 
correct  course  in  most  cases  would  be  to  include  the  imports 
and  exports  of  specie  with  those  of  the  merchandise.     Specie 

*  Throughout  this  article,  except  where  specially  noted,  we  have 
taken  figures  of  specie  values  only  from  the  United  States  official 
statistics,  and  we  have  converted  the  dollar  into  sterling  money  at  4s. 
per  dollar. 


118 


THE  FOREIGN   TRADE   OF   THE   UNITED   STATES. 


is  really  merchandise  in  international  trade.  But,  whatever 
may  be  the  correct  course  generally,  it  is  certainly  necessary 
to  do  so  in  the  case  of  the  United  States,  wliich  has  been  a 
producer  of  the  precious  metals  since  1850  and  an  exporter 
of  these  metals  for  the  greater  part  of  the  period  since  then, 
while  in  the  last  few  years  the  restoration  of  a  bullion 
standard  and  return  to  specie  payments  have  led  to  a  large 
reflux  of  one  of  these  metals — gold — to  the  country,  so  that 
there  was  less  demand  for  other  imports.  Including  the  specie, 
then,  with  the  above  figures,  we  get  the  following  totals : — 

Statement  of  the  Foreign  Trade  of  the  United  States,  including 
Specie,  in  the  Years  1840,  1850,  1860,  1870  and  1880  (iu 
thousands  of  pounds). 


Year. 

Imports  of  mer- 

Exports of  mer- 

chandise and  specie. 

chandise  and  specie. 

1840 

£ 
21,408 

£ 
26,417 

1850 

35,628 

30,379 

i860 

72,433 

80,024 

1870 

92,275 

90,185 

1880 

152,200 

170,576 

Here  tlie  increase  in  amount  in  tlie  imports  between  1840 
and  1880  is  much  greater  than  when  we  left  out  the  specie, 
being  £131,000,000  instead  of  £114,000,000  only;  but 
the  increase  of  the  exports  remains  much  the  same,  being 
£144,000,000  instead  of  £143,000,000.  The  increase  in  the 
imports  is  thus  rather  more  astonishing  than  the  increase  in 
the  exports  in  the  history  of  the  last  40  years  in  the  United 
States.  The  amount  of  the  increase  is  not  very  much  less 
than  the  amount  of  the  increase  in  the  exports,  and  the 
percentage  of  the  increase  is  much  greater,  being  about  610 
per  cent.,  as  compared  with  an  increase  of  560  per  cent,  only 
in  the  exports.     The  increase  in  the  last  decade  is  again  most 


THE   FOREIGN    TRADE    OF   THE   UNITED   STATES. 


110 


remarkable,  beiiif,'  £00,000,000,  or  aljout  05  per  cent.,  in  the 
imports,  and  £80,000,000,  or  about  90  per  cent.,  in  the 
exports,  the  progress  of  the  imports,  it  will  Ijc  observed,  as  is 
the  ease  for^the  whole  period  between  1840  and  1880,  being 
much  greater  when  we  include  the  specie  than  when  we 
leave  the  specie  out. 

The  above  figures  are  those  of  tlie  total  imports  and  exports, 
tlie  imports  including  what  is  imported  for  re-export,  and  the 
exports  including  these  re-exports.  The  re-exports  in  the 
case  of  the  United  States  are  very  small,  but  the  exact  figure 
of  the  exports  of  domestic  produce  may  be  stated  : — 

Exports  of  Domestic  Pkoduce  of  the  United  States  in  the 
Years  1840,  1850,  1860,  1870  and  1880  (in  thousands  of  pounds). 


Yvav. 

Jltn-chandise. 

Bullion. 

Total. 

£ 

£ 

£ 

1840   . 

22,332 

447 

22,779 

1850    . 

26,980 

409 

27,389 

i860    . 

C3,248 

11,389 

71,637 

1870    . 

75,323 

8,777 

84,100 

1880    . 

161,789 

1,869 

166,658 

From  this  it  will  be  seen  that  the  entire  increase  in  the 
exports  is  in  the  exports  of  domestic  produce,  and  that  the 
large  increase  in  the  exports  of  "  merchandise  "  between  1870 
aiid  1880  was  to  some  extent  a  displacement  merely,  other 
products  being  sent  abroad  instead  of  the  gold  and  silver  pro- 
duced in  the  States.  There  could  l)e  no  better  illustration  of 
tlie  necessity  i'nr  including  in  the  accounts  of  United  States 
trade  the  imports  and  exports  of  bullion.  To  take  the 
increased  exports  of  merchandise  alone  would  give  a  false 
idea  of  the  increase  of  the  exports  of  American  produce. 
The  £11,389,000  of  gold  and  silver  of  d.inicstic  produce 
exported  in  1800  and  tlie  £8,777,000  cxixirtcd  in  1870  were 


120 


THE   FOREIGN    TRADE    OF    THE    UNITED    STATES. 


as  much  a  product  of  American  capital  and  labour  as  any 
other  export  of  domestic  produce,  and  the  fall  in  those  ex- 
ports between  1870  and  1880  should  of  course  be  set  off 
against  the  increase  in  the  exports  of  merchandise  so  called. 

To  complete  the  account,  and  facilitate  a  comparison  with 
the  figures  for  the  United  Kingdom  which  we  propose  to 
make,  we  add  a  note  of  the  amount  of  imports  and  exports 
per  head  of  the  population  at  the  above  dates  : — 

Ijipobts  and  Exports  of  the  United  States  per  Head  in  1840, 
1850,  1860,  1870  and  1880. 


Year. 

'" 

ports. 

Exp 

oris. 

E.^cluding 
t>pecie. 

Including 
Specie. 

Excluding 
Specie. 

Including 
Specie. 

1840 
1850 
i860 
1870 
1880 

£     s.     d. 

1    3    0 

1  10     0 

2  5    0 
2     5     4 
2  13    3 

1     £     ..     d. 
1     I      5     2 

1  10     9 

2  6     I 
1280 

309 

£     s.     d. 

19    1 

1  4  11 

2  2    7 

2  0    9 

3  G    8 

£     s.     d. 
Ill      I 

1  6      2 

2  10    I  I 

2  611 

3  S     I 

Looked  at  in  this  way,  the  figures  are,  perhaps,  a  little  less 
surprising.  Including  specie,  which  is  the  proper  way,  as 
we  have  seen,  to  treat  the  American  trade,  the  imports 
show  an  increase  between  1840  and  1880  of  £1  15s.  7d.  per 
head,  or  about  140  per  cent,  instead  of  over  GOO  per  ceiit. 
when  we  reckon  by  amounts  only ;  and  the  exports  show^  an 
increase  of  £1  17s.  per  head,  or  rather  less  than  120  per 
cent,  instead  of  560  per  cent,  when  we  reckon  by  amounts 
only.  It  will  also  be  seen  that  there  is  actually  a  decrease  of 
the  exports,  reckoning  per  head,  between  1860  and  1870,  and 
a  very  small  increase  of  the  imports,  while  the  increase 
between  1870  and  1880,  per  head,  amounts  to  about  25  per 
cent  only  in  tlie  imports,  and  to  ratlier  less  than  50  per  cent. 


THE   FOREIGN    TRADE    OF   THE    UNITED    STATES. 


121 


only  in  the  exi)orts,tliis  last  increase  being  also  very  palpably, 
to  a  large  extent,  a  recovery  from  the  depression  between 
1860  and  1870,  which  affected  the  exports  more  than  the 
imports.  Curiously  enough,  the  excess  of  exports  over  im- 
ports, which  was  5s.  lid.  per  liead  in  1840,  was  still  in  1880 
about  7s.  4d.  per  head  only,  substantially  very  little  difference 
in  the  40  years,  notwithstanding  the  great  increase  in  the 
iigures  of  the  imports  and  exports  themselves,  although  mean- 
while there  has  been  at  different  times  an  excess  of  imports. 

Such  are  the  figures  of  the  United  States  foreign  trade  for 
a  period  of  40  years ;  but,  wonderful  as  they  are,  it  will  be 
found,  we  think,  that  it  is  only  when  they  are  looked  at  in  a 
certain  way  and  for  a  short  period  only  that  the  progress 
appears  at  all  greater  than  that  of  the  United  Kingdom.  A 
proper  comparison  shows  the  progress  of  the  latter  country 
to  be  by  far  the  most  remarkable.  We  begin  with  a  com- 
parison of  the  exports  of  British  produce  only.  The  data  for 
the  imports  unfortunately  only  go  back  to  1854,  when  com- 
puted were  substituted  for  the  old-fashioned  and  utterly 
untrustworthy  official  values  ;  and  tliis  defect  extends,  of 
course,  to  the  re-exports.  The  figures  for  exports  of  British 
produce  have,  however,  been  declared  values  from  1840 
downwards,  and  these  figures  are  : — 


Exports  of  British  Produce. 


Year. 

Amount  in 

Thousands  of 

Pounds. 

Per  Head  of 
Population. 

1840    . 
1850    . 
i860    . 
1870    . 
1880    . 

£ 

51^309 

71,367 

135,891 

199,580 

223,000 

£     s.     (/. 

1  18     9 

2  II     10 
4  14     7 
6     711 
6     9     5 

122 


THE    FOKEIGN    TKADE    OF    THE    UNITED   STATES. 


Thus  tlie  increase  between  1840  and  1880  is  £172,000,000,  or 
more  than  the  total  exports  of  the  United  States,  bullion  and 
specie  together,  and  including  re-exports  in  the  latter  year  .' 
As  the  total  of  our  exports  in  1840  was  more  than  double 
those  of  the  United  States  at  that  time,  our  progress  has 
thus  been  much  the  more  remarkable.  The  comparison  per 
head  of  population  is  yet  more  striking,  as  might  be  expected 
from  the  greater  relative  increase  of  population  in  the  United 
States.  The  increase  between  1840  and  1880  is  from 
£1  18s.  9d.  to  £6  9s.  5d.  per  head,  or  £4  10s.  8d.  per  head, 
which  latter  figure  is  actually  £1  2s.  7d.  per  head  more  than 
the  total  exports  of  the  United  States  per  head  in  1880. 

Our  increase  in  the  forty  years  is  thus  about  30  per  cent, 
greater  than  the  trade  of  the  United  States  at  the  present 
time.  It  may  be  sufiicient  to  put  the  figures  of  the  exports 
per  head  together  : — 

Exports  per  Head  of  the  Population  of  the  United  Kingdom 
AND  United  States,  compared  at  different  Dates. 


United  Kingdom, 

United  States. 

Year. 

Exports  of  Domes- 

Total Exports. 

tic  Produce  onl_y. 

Inclusive  of 

Exclusive  of  specie. 

specie. 

£     s.     d 

£     s.     d. 

1840    . 

1   18     9 

Ill      I 

1850    . 

2  11  10 

I       6      2 

i860    . 

4  14    7 

2    10    I  I 

1870   . 

G    7  11 

2      611 

1880    . 

G    9    5 

3     «     I 

The  distance  between  tlie  United  Kingdom  and  the  United 
States  is  thus  much  greater  at  the  close  than  at  the  beginning 
of  the  period,  and  has  been  an  increasing  one  in  each  decade, 
except  between  1870  and  1880,  in  which  the  increase  in^he 
exports  of  the  United  Kingdom  per  head  was  much  less  than 
that    of    the   United   States.     We   have   already,   however. 


THE    FOREIGN    TRADE    OF   THE    UNITED    STATES, 


123 


drawn  attention  to  tlic  fact  of  the  special  arrest  of  tlie 
United  States  trade  between  1800  and  1870,  which  we 
assumed  to  be  due  to  the  war.  During  the  same  period 
English  exports  advanced  enormously,  and  when  we  compare 
1860  and  1880  together,  we  find  the  increase  per  head  in  the 
exports  of  the  United  Kingdom  to  be  doubki  that  of  tlie 
United  States,  The  great  increase  of  United  States  exports 
in  the  last  decade  is  thus  a  special  phenomenon,  and  pre- 
sumably indicates  largely  the  recovery  of  the  country  from 
the  effects  of  the  war. 

Turning  to  the  imports,  we  find  that  the  figures  of  British 
trade  to  be  compared  with  those  of  the  United  States  are  as 
follow : — 

Imports  into  the  United  Kingdom,  exclusive  of  Specie  (in 
thousands  of  iiounds). 


Year. 

Amount. 

Per  Head  of 
Population. 

1855*.           .           . 
i860    , 
1870    . 
1880    . 

£ 

143^542 
210,531 
303,257 
411,229 

£     s.     d. 

5     3    2 

770 

9  14     4 
II    18     7 

Thus  the  imports  have  increased  between  1855  and  1880  by 
the  large  sum  of  £268,000,000,  or  more  than  double  the 
increase  of  the  imports  of  the  United  States,  inclusive  of 
specie,  between  1840  and  1880.  Here,  also,  the  increase 
has  been  as  great  in  the  last  decade  as  any  previous  one, 
being  £108,000,000,  as  compared  with  an  increase  of 
£60,000,000    in    the    case    of    the    United    States.       AVe 


*  We  have  computed  values  of  the  imports  into  the  United  Kingdom 
from  this  date  only.  Previously  there  were  only  official  values,  which 
were  worthless. 


124 


THE    FOREIGN    TRADE    OF    THE    UNITED    STATES. 


add,  as  in  the  case  of  the  exports,  a  comparison  of  the 
amounts  per  head  of  the  population  of  the  United  Kingdom 
and  the  United  States  respectively,  showing  still  more  re- 
markably the  superior  progress  of  the  United  Kingdom  : — 

Imports  per  Head  of  the  Population  in  the  United  Kingdom 
AND  United  States  respectively. 


United  Kingdom. 

United  States. 

Year. 

Exclusive  of 

Inclusive  of 

Specie. 

Specie. 

£     s.     d. 

£     s.     d. 

1840   . 

I      5      2 

1850   . 

I    10     9 

1855    . 

5  '3    2 

i860   . 

7    7    0 

2      6       I 

1870    . 

9  14    4 

280 

1880   . 

11  18    7 

309 

Thus  the  imports  per  head  of  the  population  in  the  United 
Kingdom  are  nearly  four  times  those  of  the  United  States, 
and  the  increase  since  1860  alone  has  been  £4  lis.  7d.  per 
head,  or  50  per  cent,  more  than  the  total  imports  in  the 
United  States  per  head  at  the  present  time,  which  are  only 
£3  Os.  9d.  per  head.  As  we  have  seen,  our  exports  per  head 
are  still  nearly  double  those  of  the  United  States,  in  spite  of 
our  slower  relative  progress  between  1870  and  1880,  and 
altliough  all  the  United  States  exports  are  "  visible,"  while  in 
our  own  case  we  really  export  a  large  produce  in  an 
unrecorded  form  in  the  shape  of  labour  and  other  expenditure 
in  carrying  goods  in  our  ships  for  the  rest  of  the  world.  But 
in  imports,  which  we  maintain  to  be  the  better  test,  our 
business  is  really  four  times  that  of  the  United  States,  and 
has  increased  at  an  immensely  more  rapid  rate. 

Of  course,  it  ought  to  be  considered  in  all  these  figures  that 
imports  and  exports  in  the  case  of  the  United  Kingdom  and 
the    United    States    mean    slightly   different   things.     Our 


THE   FOREIGN    TRADE    OF   THE    UNITED    STATES.  125 

exports  of  British  produce,  so-called,  really  include  a  j^'reat 
deal  which  is  not  British  produce,  much  more  in  proporti(jn 
than  what  is  not  American  produce  in  the  case  of  American 
exports,  because  we  import  so  much  raw  material  to  be 
manufactured  for  export.  Our  imports,  also,  are  not  so 
much,  as  in  America,  imports  for  final  consumption  ;  but, 
probably,  we  re-export  £100,000,000  or  more  of  them — over 
£60,000,000  directly  and  the  remainder  in  the  indirect  form 
we  have  referred  to.  But,  making  all  allowances  and  reckon- 
ing per  head,  there  can  obviously  be  no  question  both  of  the 
greater  magnitude  of  our  foreign  trade  as  compared  with  that 
of  the  United  States  and  of  its  more  rapid  progress. 

The  one  novel  fact  in  the  case  of  the  United  States  is  the 
rapid  increase  of  the  exports  in  recent  years.  We  have  to 
draw  attention,  liowever,  to  the  fact,  which  is  especially 
important  in  a  comparison  with  the  United  Kingdom,  that 
the  increase  in  tlie  recorded  exports  of  the  United  States 
is  probably  neutralised  to  some  extent  by  a  decrease  in  what 
we  have  referred  to  in  the  case  of  England  as  the  unrecorded 
exports — viz.,  those  wdiich  are  made  in  the  shape  of  labour 
and  other  expenditure  in  the  business  of  carrying  goods  on 
the  ocean.  The  United  States,  being  formerly  a  large  ship- 
owning  country,  exported  part  of  the  produce  of  its  labour  as 
we  do  now,  not  in  a  finished  form — a  product  which  could  be 
recorded  at  tlie  Custom  House  as  an  export — but  in  tin; 
incomplete  form  of  the  hire  of  its  ships  and  the  seamen 
navigating  them,  which  is  not  recorded  as  an  export.  Having 
now"  become  less  of  a  ship-owning  nation,  it  must,  to  obtain 
the  same  result  in  the  shape  of  imports  it  wmilil  otherwise 
obtain,  export  more  largely  in  a  visible  form.  If  the  United 
States,  in  other  words,  had  increased  its  ship-owning,  its 
recorded  exports  would  have  increased  less,  if  its  imports 
were  what  they  are  now.     That  this  is  not  a  mere  theory  is 


126 


THE   FOREIGX   TRADE    OF   THE    UNITED   STATES. 


palpable  enough  when  Ave  refer  to  the  shipping  statistics  of 
the  United  States.  The  tonnage  of  the  American  mercantile 
marine  in  the  foreign  trade  has  diminished  as  follows  in  the 
last  few  years:— 1870,*  1,449,000  tons;  1875,  1,515,000 
tons;  1880,  1,314,000  tons.  Thus,  in  spite  of  a  steady 
increase  in  the  imports  and  exports,  the  foreign  shipping 
belonging  to  the  United  States  has  rather  diminished,  and  the 
result  must  accordingly  have  been  an  increase  in  the  visible 
exports  which  would  not  otherwise  have  been  necessary.  The 
difference  thus  arising  is  probably  enormous,  as  we  perceive 
at  once  when  we  consider  the  magnitude  of  the  entries  of 
shipping  in  the  direct  foreign  trade  of  the  United  States. 
These  have  progressed  as  follows  : — ■ 


Year. 

Total  entries. 

Of  1 

vhich. 

American  only. 

Foreign. 

i860 
1870 
1880 

Tons. 

5,000,194 

6,270,189 

15,239,534 

Tons. 

3,301,903 
2,452,226 
3,128,374 

Tons. 

1,698,291 

3,817,963 

1    12,111,160 

Tims  between  1870  and  1880  there  has  been  an  increase  of 
the  entries  of  ships  at  United  States  ports  in  the  foreign  trade 
of  that  country  amounting  to  9,000,000  tons,  of  which  only 
676,000  tons  have  been  American,  the  remainder  being 
foreign.  Consequently,  the  United  States  have  had  to  pay 
other  countries  for  carrying  their  goods,  and  this  is  one  reason 
wdiy  their  visible  or  recorded  exports  have  increased.  The 
clearances  being  equal  to  the  entries,  there  is  an  increased 
movement  of  16,000,000  tons  in  the  foreign  trade  of  the 
United  States   in   the   10   years,   belonging   exclusively  to 


*  We  do  not  go  farther  hack  than  1870,  as  there  appears  to  have 
been  a  change  of  the  system  of  measurement  between  1860  and  1870. 


THE    FOREIGN   TRADE    OF   THE    UNITED    STATES.  127 

roreigu  ships,  wliicli  at  only  £1  per  ton  would  have  made  a 
difference  of  £16,000,000  in  the  exports.  Tlie  United  States, 
if  they  had  been  more  largely  sliip-owning,  and  in  that  form 
liad  done  £10,000,000  worth  of  Avork  more  than  they  have 
(lone,  would  have  needed  to  export  in  a  visible  form 
£1 0, 000,000  less  tluui  they  are  now  annually  exporting.  In 
other  words,  much  of  the  increase  of  the  United  States 
exports  in  recent  years  is  simply  to  be  accounted  for  by  the 
fact  that  it  does  less  and  less  of  a  ship-owning  business  in 
proportion  to  its  other  Imsincss  than  it  did. 

Another  curious  fact  may  also  be  referred  to  as  an 
additional  proof.  The  United  States  in  their  statistics 
profess  to  distinguish  between  the  value  of  their  exports 
carried  in  their  own  ships  and  those  carried  in  foreign  sliips. 
It  appears  that  while  in  1870  American  ships  carried 
£36,000,000  of  the  exports  from  America  and  foreign  ships 
£75,000,000,  the  amount  carried  in  1880  in  American  ships 
was  £22,000,000  only,  while  the  amount  carried  in  foreign 
ships  had  risen  to  £144,000,000.  No  wonder  that  the 
recorded  exports  should  increase  largely,  the  Americans 
having  so  much  more  carriage  to  pay  for. 

These  being  the  facts  of  United  States  trade  in  recent 
years,  we  are  in  a  position  to  appreciate  the  claim  of  the 
protectionists  to  have  it  held  that  an  exceptional  increase  in 
United  States  trade  is  a  proof  of  the  exceptional  advantages 
of  protection.  In  point  of  fact,  the  trade  of  that  country  has 
not  increased  exceptionally.  By  far  the  most  striking 
illustration  of  increase  is  still  presented  Ijy  the  United 
Kingdom,  the  great  free-trade  country,  and  tlie  United  States 
are  really  nowhere  in  the  comparison.  This  increase  in  our 
own  case  is  also  the  more  remarkable,  because,  being  a  ship- 
owning  nation,  we  export  largely  in  an  invisible  and  un- 
recorded form  which  a  nation  less  markedly  ship-owning  does 


128 


THE    FOREIGN    TRADE    OP    THE    UNITED    STATES. 


not  do.  "What  is  really  novel  and  exceptional  in  the  United 
States  increase  is  an  increase  of  exports  in  the  last  few  years 
which  would  probably  have  been  much  less  than  it  is  but  for 
the  simultaneous  loss  of  its  ship-owning  business.  This 
special  increase,  therefore,  is  not  an  increase  which  can  be 
ascribed  to  the  advantages  of  a  protective  regime,  but  it  is  to 
be  counted  with  the  disadvantages  ;  it  is  a  sign,  and  nothing 
more,  of  the  influence  of  protection  in  killing  the  industry  of 
ship-owning  along  with  other  industries.  Our  own  \dsible 
exports  would,  no  doubt,  increase,  and  that  enormously,  or 
our  imports  would  decrease,  if  we,  too,  were  to  kill  our  ship- 
owning  industry  by  protection,  and  the  carrying  of  our  foreign 
trade  were  to  fall  into  other  hands. 

There  are  some  other  facts  in  American  trade,  however, 
which  show  how  little  protection  has  to  do  with  the  expansion 
of  the  exports.  The  expansion  is  exclusively  in  unprotected 
articles — mainly  cotton,  grain,  meat,  and  provisions.  The 
figures  on  this  head  are,  indeed,  very  striking : — 

Exports  of  Eaw  Cotton,  Grain,  Meat,  and  Provisions  from  the 
United  States  in   1870-80  (in  millions  of  lbs.  or  bushels  for 
quantities  and  millions  of  jjouuds  sterling  for  values) : — 
quantities. 


Year. 

Cotton. 

Wheat. 

Indian 
Corn. 

Bacon  & 
Hams. 

Fresh 
Beef. 

Butter. 

Cheese. 

lbs. 

Bushels. 

Bushels. 

lbs. 

lbs. 

lbs. 

lbs. 

1871 

1,463 

34 

10 

71 

4 

64 

1872 

934 

26 

34 

246 

8 

m 

1873 

1,200 

39 

38 

395 

4 

80 

1874 

1,359 

71 

34 

347 

4 

91 

1875 

1,260 

53 

29 

250 

6 

101 

1876 

1,491 

55 

49 

3V 

5 

97 

1877 

1,445 

40 

71 

460 

49* 

21 

107 

1878 

1,608 

72 

85 

592 

54 

22 

124 

1879 

1,628 

122 

86 

732 

64 

38 

142 

1880 

1,822 

153 

98 

759 

85 

39 

127 

Not  separately  stated  before  1877. 


the  foreign  trade  of  the  united  states. 
Values. 


129 


Year. 

Cotton. 

11  read  and 
lircadstiillk.* 

Provisions.t 

Total. 

1871 
1872 
1873 
1874 
1875 
1876 
1877 
1878 
1879 
1880 

44 
36 
45 
42 
38 
38 
34 
36 
32 
42 

f 

Tg 

17 
20 

32 

26 
24 
36 

42 
58 

£ 

8 

12 

16 
16 
16 
18 
25 
25 
23 
25 

£ 
68 

65 

81 
90 
76 
82 
S3 
97 
97 
125 

Note. — This  table  does  not  quite  comiiare  with  the  ligures  as  to 
American  exix»rts  above  given,  which i  were  all  specie  values.  Here 
they  are  mixed  gold  and  cm-rency.  The  apjjarent  increase  here  shown 
is  thus  less  than  the  real  increase  according  to  specie  values. 

Thus,  about  three-fourths  of  the  increase  of  American 
exports  which  took  place  between  1870  and  1880,  amounting 
to  £80,000,000,  is  accounted  for  by  the  increase  in  the  above 
articles  alone ;  and  probably  a  still  larger  part  of  the  increase 
is  really  accounted  for  in  tliis  way  for  the  reason  stated  in 
the  above  note.  In  other  words,  the  increase  in  United 
States  exports  is  not  only  what  it  is  on  account  of  protection 
having  killed  shipowning  in  the  United  States,  but  it  is 
exclusively  in  articles  where  the  United  States  has  natural 
advantages,  to  which  it  gives  no  protection,  and  to  which  a 
regime  of  protection  would  do  no  good,  though  it  might  do 
harm.  What  is  still  more  to  the  purpose,  perhaps,  is  the 
increase  in  articles  of  wliich  the  United  Ivingdom  is  the 
largest  consumer.  It  is  the  demand  of  the  free-trade 
country  which  has  attracted  the  supply  from  a  protectionist 

*  Principally  wheat  and  Indian  com. 

t  Including  mainly  bacon  and  hams,  fresh  beef,  and  butter  and 
cheese. 

II.  K 


130     THE  FOEEIGN  TRADE  OF  THE  UNITED  STATES. 

country.      The   main   reason   for  the   growth   of  American 
exports  is  our  being  rich  enough  to  buy. 

Apart  from  the  question  between  free  trade  and  protection, 
however,  a  very  important  conclusion  is  suggested  |^by  the 
figures.  Although  the  United  States  has  hitherto  progressed 
more  slowly  than  we  have  done,  and  the  rate  is  especially 
slow  when  we  reckon  per  head  of  the  population,  yet,  in  fact, 
the  aggregate  value  of  its  foreign  trade  may  increase  faster 
than  ours  on  account  of  the  much  more  rapid  increase  of  a 
population  which  is  already  half  as  large  again  as  that  of  the 
United  Kingdom,  and  more.  The  exports  of  domestic  pro- 
duce 2Jcr  head  are  less  than  half  those  of  the  United  Kingdom, 
but  in  aggregate  value  they  are  nearly  four-fifths  those  of  the 
latter  country.  In  other  years  it  may  well  be  that  the 
exports  will  still  only  be  half  those  of  the  United  Kingdom 
per  head,  but  as  the  population  will  be  nearly  double,  the 
aggregate  value  of  the  exports  of  each  country  will  be  the 
same.  Even  then  there  will  still  be  some  real  distance 
between  the  United  States  and  ourselves  on  account  of  our 
unrecorded  exports,  but  at  a  point,  it  is  plain,  the  United 
States  can  hardly  fail  to  overtake  us  and  export  more, 
aggregate  for  aggregate,  though  not  more  per  head.  In  the 
international  trade  of  the  world  it  is  becoming;  a  larger 
factor.  It  is  the  same  with  the  imports.  "We  now  import 
annually  per  head  about  four  times  what  the  people  of  the 
United  States  import,  but  in  the  aggregate  the  United  States 
imports  are  about  one-third  of  ours.  It  may  well  be,  then, 
that  in  other  ten  years  the  proportion  per  head  will  be  much 
the  same,  but  the  population  of  the  United  States  being 
double  that  of  the  United  Kingdom,  the  aggregate  foreign 
trade  will  be  50  per  cent,  and  upwards  that  of  ours.  The  next 
few  years  at  the  recent  rate  of  progress  must  witness  in  this 
way  a  great  change  in  the  international  position  of  the  United 


THE   FOREIGN    TRADE    OF   THE   UNITED   STATES.  131 

States.     In  another  respect,  also,  the  cliange  will  be  a  serious 
one.     The  whole  of  Western  Europe,  as  well  as  the  United 
Kingdom,  is   becoming   more  and   more  dependent  on  the 
United  States  for  cotton  and  food,  the  increase  in  the  imports 
from  the  United  States  l^eing  at  least  equal  to  tlic  annual 
increase  of  population  as  regards  food,  while  the  world  is 
as  dependent  on  the  United  States  for  its  whole  supply  of 
cotton  as  it  was  in  18G0.     In  the  next  ten  years  what  will 
happen  will  undoubtedly  be,  on  tlie  one  hand,  a  great  increase 
of  the  dependency  of  Western  Europe,  and  principally  the 
United  Kingdom,  on  the  United  States  for  a  necessary  supply 
of  food  and  raw  material,  and,  on  the  other  hand,  an  increased 
difficulty  in  the  United  States  itself  in  finding  an  adequate 
outlet  for  those  productions  of  which  it  has  lately  had   so 
large  a  surplus  to  dispose  of.     As  regards  this  last  point,  it 
is  plain  that  if  the  United  States  in  recent  years  has  over- 
taken with  its  surplus  the  increase  of  population  in  Western 
Europe,  then,  as  it  has  now  a  much  larger  population  to  start 
with  than  it  had  ten  years  ago,  and  the  rate  of  increase  is  the 
same,  or  even  greater,  it  will  probably  in  the  next  ten  years 
have  a  still  more  formidable  surplus  relatively  to  the  increase 
of  population  in  Western  Europe  to  dispose  of.     In  other 
words,  then,  an  increase  of  the  severity  of  American  com- 
petition with  European  agriculture  is  certain,  and  Western 
Europe   will   also   be   more  and   more   exposed   to   serious 
consequences  if  any  climatic  accident  should  happen  to  the 
United  States  harvest,  or  if  there  should  be  a  political  and 
social  convulsion  like  that  which  caused  the  cotton  famine. 
Whether  it  is  wise  in  the  nations  of  Western  Europe  to  en- 
courage or  permit  this  dependency  on  a  single  foreign  country 
appears  to  be  a  question  remote  enough  from  the  habits  of 
thought  of  our  public  men,  but  which  may  force  itself  on  their 
attention  at  any  moment  in  the  most  unexpected  fashion.  [1881.] 

K  2 


K    132    ) 


YI. 

THE  USE  OF  IMPOET  AND  EXPOET  STATISTICS.* 

I.— IN  TROD  UCTOB  Y. 

We  must  all  agree  in  this  place,  I  think,  that  there  is  cause 
both  for  encouragement  and  discouragement  to  us  as  regards 
the  prospects  of  the  study  in  which  we  are  engaged  in  the 
very  extensive  use  of  statistics  which  some  recent  contro- 
versies have  occasioned.  I  refer  particularly  to  the  balance 
of  trade  controversy,  and  the  controversy  between  fan-  trade 
and  free  trade  which  made  so  much  noise  last  autumn,  but 
which  has  rather  subsided  of  late,  as  questions  of  the  kind 
are  apt  to  do  when  trade  itself  is  improving.  In  these  con- 
troversies, which  have  run  very  much  into  each  other,  the 
fair  traders  having  made  use  of  the  alleged  balance  of  trade 
being  against  this  country  to  support  their  arguments,  the 
appeal  has  been  very  largely  to  statistics.  Literary  journals 
and  magazines,  which  rather  dread  figures  as  a  rule,  have 
admitted  them  into  their  columns  on  a  liberal  scale,  including 
even  tables  in  the  rough,  as  we  should  here  consider  them. 
But  while  this  appeal  to  statistics  is  cause  for  satisfaction  to 
us,  the  actual  handling  of  the  subjects  of  our  study  as  been 
such,  I  think,  as  to  prove  how  little  it  lias  really  advanced, 

*  Read  before  the  KStatistical  Society,  March  21, 1882.  The  Tables 
in  the  Appendix  referred  to  in  the  course  of  the  paper  will  be  foimd 
in  the  '  Journal  of  the  Statistical  Society '  for  June,  1882. 


THE   USE    OF    IMPORT    AND   EXPORT   STATISTICS.  133 

viot  merely  amongst  the  multitude  only,  Lut  amongst  the 
classes  who  are  most  carefully  and  highly  cultivated.  There 
has  been  a  great  hash  of  figures,  indicating  that  those  who 
use  them  have  hardly  the  rudiments  of  statistical  ideas, 
whether  true  or  false.  In  journals  of  the  highest  standing 
there  are  the  wildest  blunders  of  the  schoolboy  order.  Thus 
in  the  '  Quarterly  lieview '  of  July  last,  a  writer  states  and 
argues  upon  tlie  statement :  "  It  is  estimated  tliat  about  a 
million  of  acres  of  land  have  gone  out  of  cultivation  during  the 
last  ten  years."  *  The  fact,  of  course,  is  that  there  is  not  a 
year  in  the  last  ten  in  which  the  cultivated  area  of  the 
United  Kingdom  has  not  increased,  the  total  increase  being 
nearly  2  million  acres.  The  same  writer  also  makes  a  great 
mess  of  the  very  figures  of  imports  and  exports  with  wliich  I 
propose  to  deal  specially  to-night.  He  makes  the  excess  of 
imports  into  the  United  Kingdom  in  1879  £170,595,983,  and 
in  1880  £187,179,530,  and  in  the  first  five  months  of  1881 
£78,782,396,  having  obviously  omitted  in  all  cases  the  re- 
exports of  foreign  and  colonial  merchandise,  by  whicli  these 
figures  would  be  reduced  by  60  million  pounds  a  year  or 
upwards,  while  he  quotes  as  his  authority  the  qaartcny  re- 
turns of  the  Board  of  Trade,  which  issues  no  quarterly  returii:> 
relating  to  imports  and  exports,  but  only  monthly  and  annual 
returns.!  Similarly  a  writer  in  the  'Nineteenth  Century,* 
for  August  last.  Sir  Edward  Sullivan,  compares  the  property 
assessed  to  the  legacy  and  succession  duties  in  England  \\itk 
the  property  assessed  to  similar  duties  in  France,  which  has 
no  such  duties  at  all,  but  which  has  only  probate  duties, 


*  'Quarterly  Review,'  July,  1881,  p.  282. 

t  Ibid.,  July,  1881,  \).  288.  It  is  just  possible  that  the  writer  may 
refer  to  a  fniarterly  account  published  at  intervals  in  the  monthly 
Itoard  of  Trade  returns,  but  his  allusion  is  so  vague  as  to  indicate  that 
he  has  little  idea  what  the  publications  arc. 


134  THE    USE    OF   niPOKT    AND    EXPORT   STATISTICS. 

wliich  are  levied  like  ours  on  the  gross  amount  of  tlie  estates 
oi'  deceased  persons,  without  deduction  for  debts,  whereas 
our  legacy  and  succession  duties  are  imposed  on  the  net 
amounts  of  property.*  vSimilarly  he  speaks  elsewhere  of  the 
"  commerce  "  of  the  world  having  increased  36  per  cent,  in 
ten  years,  and  English  commerce  so  much  less,t  the  actual 
fact  being  of  course  that  there  is  no  figure  in  existence  which 
can  be  spoken  of  as  representing  the  commerce  of  the  world ; 
wliile  the  writer  probably  meant  the  foreign  commerce,  and 
yet  excluded  from  his  comparison  one  of  the  most  important 
parts  of  English  foreign  commerce,  viz.,  the  shipping.  Our 
satisfaction  therefore  at  seeing  so  frequent  an  appeal  to 
statistics  must  be  considerably  qualified  by  the  nature  of  the 
appeal.  It  is  evidently  still  quite  possible  for  essays  to  find 
admission  to  journals  of  high  standing  like  the  '  Nineteenth 
Century '  and  the  '  Quarterly  Eeview,'  in  wliich  the  writers 
not  only  make  mistakes,  but  mistakes  of  an  elementary  and 
substantial  character,  as  if  in  discussing  chemistry  a  writer 
were  to  confound  oxygen  with  hydrogen,  or  as  if  in  discussing 
geometry  he  were  to  confound  an  isosceles  with  a  right-angled 
triangle.  Writers  who  were  capable  of  making  such  mistakes 
in  chemistry  and  geometry,  however  cultivated  in  other 
respects,  would  either  not  find  admission  to  the  pages  of  the 
*  Nineteentli  Century '  or  the  '  Quarterly  Eeview,'  or  their 
mistakes  would  be  corrected  by  the  editors ;  but  the  popular 
standard  for  statistics  is  evidently  as  yet  not  so  strict  as  it  is 
for  other  scientific  studies.  Any  man,  it  seems  to  be  tliought, 
can  handle  figures,  and  writers  who  are  otherwise  competent, 
are  not  afraid  to  touch  them  as  they  would  be  afraid  to  touch 
chemistry,  or  geometry,  or  botany,  or  geology,  or  almost  any 

*  '  Nineteenth  Century,'  August,  1881,  p.  173. 
t  Ibid.,  August,  1881,  p.  172. 


THE    USE   0^   IMPOKT    AND    EXPORT   STATISTICS.  135 

science  one  could  name.  That  our  special  study  slu mid  be 
so  little  advanced,  .although  there  is  a  dim  idea  in  the  public 
mind  of  the  utility  of  statistics,  must  surely  be  a  matter  for 
concern  to  a  Society  which  has  been  established  for  nearly 
fifty  years  for  the  express  purpose  of  diffusing  right  ideas  and 
information.  We  have  still,  it  is  plain,  a  great  work  before 
us  to  perform. 

It  is  in  this  view  that  the  present  paper,  which  is  mainly 
directed  to  the  method  of  statistics,  has  been  written.  The 
object  is  to  show  how  great  may  be  the  errors  in  using  the 
comparatively  well-known  figures  of  imports  and  exports, 
unless  proper  caution  is  exercised,  and  how  difficult  it  is  to 
elicit  true  conclusions  on  the  questions  respecting  the 
balance  of  trade  and  free  trade  r.  protection,  which  have 
lately  been  discussed.  Statistics,  I  need  hardly  say  in  this 
company,  are  almost  always  difficult.  No  table  almost  can 
be  used  without  qualification  and  discretion.  The  moment 
we  perceive  that  figures  are  used  without  qualifications  and 
without  anxiety  to  appreciate  them  in  their  right  meaning, 
and  to  support  no  greater  conclusion  than  they  can  be  made 
to  bear,  we  may  be  sure  there  is  something  wrong.  My 
object  will  have  been  gained  if  the  remarks  I  have  to  make, 
and  the  discussion  they  elicit,  help  to  popularise  what  are 
really  truisms  within  these  walls,  but  which  ought  also  to  bo 
truisms  outside,  if  statistics  held  the  place  they  ought  to  do 
among  politicians  and  public  men. 


136  THE   USE   OF   IMPORT   AND   EXPORT    STATISTICS. 


II.— GENERAL  REMARKS  ON  UIPORT  AND 
EXPORT  FIGURES. 

In  dealing  with  tlie  causes  of  error  in  handling  import  and 
export  statistics,  it  would  of  course  be  superfluous  for  me  to 
do  more  than  mention  such   questions   of  method   as   are 
common  to  them  and  all  other  statistics.     In  using  them,  as 
in  other  statistics,  it  is  of  course  necessary  to  see  that  in 
comparing  different  years  or  different  countries  the  data  are 
substantially  of  the  same  nature.     I  shall  have  to  notice 
some  special  difficulties  of  this  sort  in  regard  to  imports  and 
exports  which  I  am  aware  of;  but  I  am  only  at  first  noticing 
the  principle  as  a  well-known  one.     It  is  also  necessary  in 
comparing  one  period  with  another,  so  as  to  draw  out  a  curve 
of  progress  or  retrogression,  to  ascertain  whether  the  figures 
of  single  years  or  of  less  periods  can   safely  be    used,  or 
whether,  as  is  more  likely  to  be  the  case,  the  mean  or  average 
of  groups  of  years  ought  to  be  used.     For  some  purposes,  as 
we  know  from  statistics  of  crime,  x^opulation,  and  the  like, 
five,  and  even  ten  years'  periods  are  by  no  means  too  long  to 
be  considered,  and  common  sense  will  tell  us  that  for  many 
purposes  this  will  also  be  the  case  with  trade  statistics,  trade 
having  ups  and  downs,  if  nothing  else  has,  whatever  regime 
it  may  be  subject  to,  and  the  statistician's  first  business  being 
to  eliminate  the  errors  which  may  be  due  to  such  ups  and 
downs.     A  large  discourse  might  be  written  even  on  these 
points,  which  are  liabitually  neglected  by  popular  writers 
who  use  statistics,  and  by  persons  of  more  authority.     A 
question,  for  instance,  was  put  by  Mr.  Mclver  last  session,* 
to  the  President  of  the  Board  of  Trade,  the  whole  point  of 

*  Times,  June  li,  1881. 


THE    USE    OF   IMPORT    AND    EXrORT    STATISTICS.  137 

wliicli  was  that  our  exports  to  Prance  liad  diniiuisIieU  iVojii 
33  million  to  28  million  pounds  in  ten  years,  while  our 
imports  had  increased  from  30  mini()nto42  million  pounds  in 
the  same  period,  and  the  explanation  being  that  the  apparent 
decrease  in  the  one  case  and  increase  in  the  other  corresponded 
only  to  temporary  facts  of  trade,  because  the  year  1871, 
owing  to  the  Franco-German  war,  was  of  a  wholly  exceptional 
character  as  regards  the  trade  lietween  France  and  England. 
Another  elementary  difficulty  is  in  the  use  of  percentages, 
especially  those  of  increase  or  decrease,  nothing  being  more 
necessary  than  a  cautious  use  of  such  percentages,  and, 
especially  when  comparisons  are  made,  a  use  of  them  only 
with  reference  to  amounts  as  well  as  percentages.  In  the 
beginning  of  things  percentages  may  be  large,  as  we  all 
know,  but  the  real  growth  may  Ite  largest  where  the  percen- 
tage is  least,  in  consequence  of  the  greater  amount  at  which 
the  percentage  is  calculated.  We  are  all  familiar  here  also 
with  M.  Quetelet's  illustration  of  the  enormous  mortality  of 
a  particular  street,  in  which  nearly  all  the  inhal)itants  died, 
and  where  the  area  was  really  too  small  to  yield  any  good 
average.  Some  of  the  arguments  of  the  '  Nineteenth  Cen- 
tury,' already  referred  to  as  to  the  percentages  of  the  growth 
of  the  commerce  of  different  countries,  are  really  as  illogical.' 
But  elementary  as  this  paper  is  intended  to  be,  I  may 
perhaps  be  excused  from  going  into  such  extreme  common- 
places, which  relate  not  merely  to  imports  and  exports,  but 
to  all  statistics.  When  these  matters  are  properly  attended 
to,  enough  remains  to  be  considered  as  regards  imports  and 
exports  which  may  well  demand  the  utmost  caution. 

The  fiTiit  point  to  be  considered,  as  in  all  statistics,  is  the 
degree  of  accuracy  obtained  in  the  original  data.  The  tiguros 
of  imports  and  exports  are  sometimes  used,  and  we  are  all  of 
us  too  apt  to  use  them,  as  if  they  were  figures  in  accounts, 


138  THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS. 

giving  rise  to  no  question  respecting  tlie  nature  of  the  data  •;. 
as  if  every  particle  of  commodities  and  every  pound  of  value 
sent  out  or  brought  into  a  country,  and  to  and  from  what 
countries  they  were  sent  or   brought,  were   recorded  with 
perfect  accuracy ;  and  as  if  too  the  accounts  of  all  countries,, 
and  of  each  country  at  different  times,  were  made  up  on  the 
same  principles,  and  could  be  trusted  to  the  same  degree. 
Those  who  know  anything  of  statistical   compilation,  and 
even  those  who  do  not  know,  if  they  only  consider  for  a 
moment  the  necessary  conditions,  will  perceive  at  once  that 
no  impression  could  be  more  unfounded.     In  all  statistical 
inquiries  the  nature  of  the  data  is  a  necessary  question,  and 
there  are  great  varieties  in  the  possible  degree  of  accuracy, 
while  the  same  data  may  be  sufficient  for  one  purpose  and 
not  for   another.     Thus  a  census   like   that  of  the  United 
Kingdom,  made  on  the  same  day  for  the  whole  kingdom,  by 
a  staff  of  enumerators  collecting  individual  returns  from  all 
householders,  yields  results  which  are  absolutely  trustworthy 
to  a  most  infinitesimal  fraction  as  regards  the  numbers  of  the 
people,  as  regards  the  sexes,  as  regards  the  conjugal  condition,, 
that  is,  whether  married  or  not,  and — witli  some  exceptions 
perhaps — as  regards  the  numbers  at  each  age.     The  popula- 
tion of  small  localities  on  the  day  of  the  census  may  also  be 
considered   to  be  stated  as  regards   all   these   details  with 
practically  complete  accuracy.     But  wlien  we  come  to  such 
details   as   the    occupations   of  the   people,   whicli   involve 
inherent  difficulties  of  statement  by  those  who  have  to  make- 
the  returns,  and  of  classification  by  those  who  compile,  we 
are  plainly  on  more  treacherous   ground.     Especially  with 
the  smaller  occupations,  and  in  comparisons  between  different 
localities,  it  would  become  necessary  for  inquirers  to  use  the 
figures  witli  judgment  and  discretion,  and  to  bring  to  their 
aid  a  study  of  the  instructions  to  the  enumerators,  and  infor- 


THE    USE    OF   IMPORT    AND    EXPORT   STATISTICS.  139 

matioii  from  local  or  special  sources.  In  iisiny  the  popiilatujii 
figures  again  for  deducing  birth,  marriage,  and  death-rates, 
the  fact  that  the  population  returned  is  only  the  population 
on  a  given  day,  and  that  there  are  many  localities  in  which 
the  population  on  other  days  of  the  year  would  he  less  or 
more,  has  to  be  considered;  while  the  special  birth, marriage, 
and  death-rates  themselves,  that  is  the  rates  as  compared 
with  the  population  at  particular  ages,  would  be  still  more 
liable  to  error.  There  are  methods  for  eliminating  errors  known 
to  statistical  experts  by  wliich  the  data  can  be  used,  but 
the  methods  must  be  employed  if  any  good  result  is  to  be 
obtained.  To  give  anotlier  illustration  from  matters  within 
my  own  department — the  emigration  statistics.  As  far  as 
numbers  are  concerned,  these  statistics  are  complete — we 
have  practically  a  complete  record  of  passengers  leaving  the 
country  for  places  out  of  Europe,  and  returning  to  it  from 
jjlaces  out  of  Europe.  IMaking  the  assumption,  as  I  believe 
w^e  may  do,  that  the  balance  of  the  resident  population  is 
unaffected  by  people  coming  and  going  from  and  to  European 
ports, — the  excess  of  "  imports  "  from  such  places,  if  I  may 
adapt  a  well  known  expression  to  this  subject,  being  practi- 
cally all  exported  to  places  out  of  Europe, — the  emigration 
and  immigration  statistics  become  perfectly  trustworthy  as 
to  numbers.  I  think  also  the  distinctions  made  as  to  tlie 
nationality  and  sex  of  the  emigrants,  and  the  conjugal  con- 
dition, with  the  numbers  of  children,  are  fairly  to  be  trusted. 
But  when  we  get  to  the  "  occupations  "  I  am  not  so  sure. 
We  have  nothing  to  trust  to  but  the  description  given  by  the 
emigrants  themselves,  as  reported  by  officers  who  are  busy 
with  other  work ;  and  I  confess  I  should  not  like  to  found 
important  inferences  on  minute  changes  in  the  numbers  from 
year  to  year  of  so-called  joiners,  or  painters,  or  fiirmers,  or 
even  "  labourers."     It  would  l)e  impossible  to  use  the  figures 


140  THE    USE    OF   niPORT   AND   EXPORT   STATISTICS. 

for  such  details  to  any  good  purpose  without  much  discretion 
and  a  wide  knowledge  of  local  facts  determining  the  emigra- 
tion. To  take  yet  another  illustration — again  from  my  own 
department.  While  the  total  entries  and  clearances  of  ships 
at  ports  in  the  United  Kingdom  in  the  foreign  trade  may  be 
held  to  be  completely  accurate,  there  is  an  undoubted  defect 
in  the  statistics  of  particular  ports,  owing  to  the  practice 
which  has  been  established  of  only  returning  a  vessel  as 
entered  and  cleared  at  one  port,  though  it  may  really  enter 
and  clear  at  more  than  one.  By  the  present  practice  the 
total  of  the  port  accounts  agrees  with  that  of  the  United 
Kingdom,  and  I  believe  the  trade  of  the  ports  generally  is 
relatively  fairly  accurate,  but  the  practice  nevertheless  might 
obviously  lead  to  difficulty  and  wrong  inferences  in  special 
cases.  The  nature  of  the  data  is  thus  an  all  important 
matter. 

Now,  as  to  the  nature  of  the  data  in  import  and  export 
statistics,  we  have  the  advantage  of  a  paper  in  our  own 
Joimicd,  which  Mr.  Bourne  read  to  us  in  1871,  and  which 
will  be  found  the  first  in  his  volume,  "  Trade,  Population, 
and  Food."  A  more  useful  paper,  I  think,  was  never  laid 
before  the  Society,  and  I  shall  do  little  more  than  refer  to  it. 
Those  interested  will  find  a  full  account  in  it  of  how  the 
data  are  obtahied,  and  the  means  used  to  check  them,  with 
some  critical  observations  on  the  main  point  I  am  now 
suggesting — the  degree  of  accuracy  of  the  data.  There  are 
many  points  in  the  paper  and  in  the  whole  subject  which  in 
my  official  position  1  should  hardly  feel  at  liberty  to  discuss, 
but  the  main  points  are  indisj)utable.  The  data,  both  as 
to  quantities  and  values,  with  the  countries  of  origin  or 
destination,  are  derived  from  the  declarations  of  importers  in 
the  case  of  imports,  and  of  shippers  in  the  case  of  exports, 
subject  to  a  certain  check  by  the  customs'  officers,  and  there 


THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS.  141 

is  a  margiu  of  error  to  be  allowed  lor  in  these  declarations, 
Mr.  Bourne,  as  regards  quantities  only,  compares  the  declara- 
tions in  the  case  of  dutiable  goods  imported  witli  the  actual 
weights  or  measurements  subsequently  made  by  the  customs* 
officers,  and  points  out  a  variation  between  the  two  ranging 
from  0'21  per  cent,  in  the  case  of  cocoa,  to  5'70  per  cent,  in 
the  case  of  tobacco,  and  averaging  for  all  the  articles  1"50 
per  cent.  According  to  this,  the  declarations  actually  made, 
and  which  are  the  basis  of  all  the  statistics,  are  subject  to 
such  variations.  They  are  no  doubt  checked  by  the  customs' 
officers  and  corrected  for  the  annual  statement  of  trade,  so 
that  the  limit  of  error  is  farther  reduced,  but  in  the  case  of 
non-dutiable  goods  some  limit  of  error  must  remain.  These 
are  the  facts  as  regards  quantities  only.  As  regards  values, 
what  Mr.  Bourne  points  out  as  regards  the  imports  is 
especially  important : — 

"  The  present  system  lias  great  disadvantages,  arising  from  the 
want  of  knowledge  on  the  part  of  the  importers,  the  indifference  of 
many  who  pass  the  entries,  and  the  impossibility  of  the  department 
exercising  a  valid  check.  It  is  well  known  that  a  very  large  propor- 
tion of  the  goods  sent  to  this  country  are  on  consignment,  and  not  on 
purchase,  in  which  case  there  is  no  invoice  or  statement  of  prices.  In 
these  cases  the  consignee  is  very  much  in  ignorance  of  their  quality  or 
price,  and  therefore  unable  to  fix  a  jtroper  value  until  they  have  been 
examined  and  sampled.  Where,  again,  as  is  very  frequently  done,  the 
entry  is  made  by  a  mere  agent,  who  may  gather  the  description  of  tho 
goods  from  the  ship's  report,  and  estimate  the  weight  from  the  nature 
of  the  packages ;  there  is  no  guide  at  all  to  the  value.  In  other 
instances  there  is  great  indisposition  to  let  the  true  value  be  kuo's^Ti. 
Supposing,  as  is  constantly  the  case,  wine  to  be  brought  from  Hamburg 
in  casks,  branded  with  the  mark  of  the  best  Spanish  vintages,  it  is 
very  improbable  that,  however  vile  the  stuff  may  be,  it  will  be  valued 
at  less  than  the  price  of  good  sherry.  The  greatest  vigilance,  therefore, 
is  necessary  to  guard  against  the  most  erroneous  values,  but  tho 
department  can  only  interfere  in  extreme  cases,  for  it  is  unable  to 
discover  or  question  any  but  very  extravagant  departures  from  tho 
average.  The  law  has  given  it  tlic  power  of  calling  for  invoices  or 
other  proof,  which  is  frequently  done,  and  fines  are  often  inflicted  for 


142  THE   USE   OF   IMPORT    AND    EXPORT    STATISTICS. 

wilful  or  careless  departures  from  the  truth.  The  only  real  security, 
however,  is  in  exciting  an  interest  amongst  those  who  have  to  declare 
the  value.  When  once  it  is  understood  that  these  and  other  particu- 
lars are  of  real  importance,  there  is,  in  importers  generally,  too  much 
good  feeling  and  desire  to  do  what  is  right,  to  permit  of  other  than 
the  best  information  it  is  in  their  power  to  give  being  placed  at  the 
disposal  of  the  authorities.  There  seems,  however,  no  way  of  providing 
for  the  very  numerous  cases  in  which  the  consignee  is  ignorant  of  the 
value,  or  the  agent  who  puts  in  the  entry  is  without  instructions  to 
suide  him." 


So  far  as  I  can  judge,  the  clieck  on  values  in  the  case  of 
exports  must  be  even  more  difficult  of  application  than  it  is 
in  the  case  of  imports. 

We  have  thus  two  facts  before  us :  first,  a  possibility  of 
error  in  the  original  declarations  as  to  quantity,  which  are 
found  to  vary  from  the  actual  quantities  on  a  considerable 
average  of  articles  as  much  as  I'oO  per  cent.,  and  in  extreme 
cases  nearly  6  per  cent.,  and  which  cannot  be  completely 
controlled  by  the  oflEicers  compiling  the  statistics ;  and  next, 
a  farther  possibility  of  error  in  the  declarations  of  values, 
owing  to  the  want  of  interest  in  the  merchants  or  agents 
making  them.  I  need  hardly  say  here,  that  errors  arising  in 
this  way  are  not  likely  to  affect  the  returns  as  a  whole  as 
much  as  they  may  affect  special  articles ;  that  in  the  absence 
of  special  motives  for  making  wrong  declarations  in  one 
du'ection,  the  errors  made  through  indifference  or  careless- 
ness hy  thousands  of  people  are  likely  to  compensate  each 
other  in  so  vast  a  field  as  that  of  the  imports  and  exports  ; 
and  that  the  comparison  between  two  or  three  years  coming 
together,  in  which  there  is  no  great  change  of  system,  might 
be  fairly  trustworthy  as  to  the  progress  or  retrogression 
shown,  even  allowing  for  a  larger  margin  of  error  than  it  is 
necessary  to  allow  for  in  the  original  data.  But  the  more 
detailed  the  use  which  is  made  of  the  statistics,  the  more 


THE   USE    OF   IMPORT    AND    EXPORT    STATISTICS.  143 

necessary  it  is  to  keep  in  iniiul  tliut  there  is  a  margin  of 
error. 

Another  point  has  also  to  be  considered.     We  may  know 
pretty  well  where  we  are  in  comparing  two  or  three  years  at 
the  present  time  ;  but  the  farther  we  go  back  the  less  is  our 
knowledge  as  to  the  way  the  business  was  done  formerly, 
and  as  to  the  increased  or  diminished  accuracy  of  the  data 
from  that  time.     This  last  fact  we  know  is  especially  impor- 
tant as  to  the  imports,  for  there  was  a  very  considerable 
ohange  of  system  in  1870,  whicli  Mr.  Bourne  fully  describes 
in  the  paper  already  referred  to.    One  of  the  principal  changes 
was  in  the  mode  of  ascertaining  the  values,  whicli  previously 
to   that   date,   from  1854   downwards,  had  been  computed 
according  to  a  plan  introduced  l3y  ]\Ir.  James  Wilson,  but 
which  have  since  been  declared  by  the  merchants  as  already 
explained.     We  cannot  be  quite  sure,  I  think,  that  the  com- 
puted values  before  1870  are  on  all  fours  with  the  declared* 
values  since ;  the  presumption  would  be  that  they  are  not. 
On  this  head  I  can  most  heartily  re-echo  the  complaint  made 
by  Mr.  Bourne  in  the  paper  already  cited,  that  the  old  plan 
was  not  maintained  in  conjunction  with  the  new  for  several 
years.     His  assertion  tliat  the  change  of  system  produced  in 
many   articles   of  import   an    apparently    great   divergence 
between   the  values   of  1871  and  former  years,  is   a  most 
serious  one,  and  should  warn  us  all  to  use  a  great  deal  of 
caution  in  carrying  our  comparisons  of  import  values  farther 
back  than  1870. 

Farther,  whatever  dependence  may  be  placed  on  the  returns 
of  the  total  imports  and  exports  of  particular  articles,  and  of 
the  aggregate  imports  and  exports,  a  fresh  difficulty  arises  in 
making  the  data  complete  as  regards  particular  countries 
traded  with.  Formerly  it  was  a  very  general  practice  to 
consider  imports' as  coming  from  the  country  they  had  last 


144  THE    USE    OF   EVIPORT    AND    EXPORT    STATISTICS. 

left,  althougli  they  niiglit  only  have  been  in  transit  through 
that  country ;  and  exports  as  being  despatched  to  the  country 
they  would  first  arrive  at,  although  they  might  only  be  going 
there  in  transit.     The  attempt  has  been  made  in  recent  years 
to  show  the  countries  of  ultimate  origin  and  destination,  but 
it  is  impossible  to  suppose  that  this  attempt  has  been  com- 
pletely successful.     "Where  there  is  a  through  bill  of  lading, 
merchants  can  easily  declare  the  country  of  origin  or  destina- 
tion  as   appearing   in  that  document,  but  such  documents 
themselves  do  not  always  disclose  the  exact  facts  on  this 
head.     I  have  again  to  refer  to  Mr.  Bourne's  statements  in 
the  paper  already  referred  to,  but  I  may  add  one  or  two 
obvious  facts,  which  you  can  all  test.     It  is  beyond  question 
that  there  is  an  appreciable  amount  of  trade  between  this 
country   and   Switzerland.      We   import  Swiss   clocks   and 
watches,  and  we  send  there  cotton  and  other  yarns  to  be 
.made  up,  besides  other  articles.     But  Switzerland  does  not 
even  figure  as  a  separate  country  in  our  returns.     Our  trade 
therewith  figures  as  part  of  the  trade  with  France,  Belgium, 
Holland,  and  perhaps  Italy.     Another  of  these  facts  is,  that 
in  recent  years  a  great  deal  of  the  raw  sugar  we  imported  was 
of  Austrian  origin,  but  the  bulk  of  it  figured  in  our  returns 
as  an  import  from  Germany.     Apart  then  from  the  above 
question  as  to  the  data  themselves,  there  is  a  special  source 
of  error  in  the  accounts  of  the  trade  with  particular  countries. 
It  must  not  be  supposed  that  all  the  so-called  trade  with 
France,  or  Belgium,  or  Holland,  or  the  United  States,  is 
really  our  trade  with  those  countries.     Large  deductions  or 
additions  may  have  to  be  made  in  a  thorough  study  of  the 
subject. 

I  have  spoken  mainly  of  the  import  and  export  statistics 
of  the  United  Kingdom,  but  mv.tatis  vw.tandis  the  same 
remarks  apply  to  the  data  of  imports  and  exports  in  every 


THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS.  1  15 

country.     (Joveiiiiucuts  Avliicli  have  a  vuluiiiin<ms  tarilf  are 
probably  more  careful  about  the  imports  than  we  are,  verify- 
ing values  and  quantities  in  a  way  we  do  not  attempt ;  such 
Oovcrnments  are  probably  also  very  careful  in  verifying  the 
•(quantities  and  values  of  articles  exported  on  which  there  is  a 
drawback  ;    but  they  are  none  of  them  likely  to  be  more 
careful  than  we  are  about  exports  where  there  is  no  draw- 
back, and  none,  we  believe,  are  in  fact  more  careful,  wliile 
their  extra  care  as  to  imports  is  no  doubt  balanced  in  most 
■cases,  in  countries  like  the  United  States  for  instance,  Ijy  the 
ingenuity  and  resource  of  the  smuggler.    No  foreign  country, 
therefore,  any  more  than  England,  has  import  and  export 
statistics  which  can  be  used  as  absolutely  accurate  in  the 
sense  commoidy  assumed.     Tlie  remarks  already  made  as  to 
the  possibility  of  useful  comparisons,  the  nearer  the  years 
compared  are  together,  and  the  danger  of  not  allowing  for 
clianges  of  system,  also  apply  to  foreign  countries  as  w^ell  as 
our  own.     On  this  latter  head  it  happens  to  be  possible  to 
give  one  or  two  good  illustrations  from  the  experience  of 
foreign  countries.   My  first  illustration  is  from  the  experience 
of  the  United  States.     Mr.  Wells,  the  special  commissioner 
of  revenue  of  the  United  States  in  1867-69,  in  one  of  his 
well-known  reports,  that  for  1869,  after  stating  at  one  jjlace 
that  he   assumes   the   sums   chargeable   to    smuggling   and 
undervaluation   of  imports   to    be  counterbalanced   by    the 
•undervaluation  of  exports,  goes  on  to  say  in  a  footnote :  "If 
we  confine  ourselves  to  the  comparison  of  the  values  given 
to  imports  and  exports  respectively,  in  previous  years,  tliis 
may  be  considered  a  reasonable  estimate;  but  for  the  last 
fiscal  year  it  is  certainly  not  the  case.     Under  the  present 
organisation  of  the  bureau  of  statistics,  the  values  given  to 
the  exports  of  the  country  have  been  scrutinised  and  verified 
to  such  an  extent  as  to  leave  but  little  doubt  that  tlie  state- 
ir.  L 


146 


THE   USE   OF   niPORT   AND   EXPORT   STATISTICS. 


ment  for  last  year  is  substantially  accurate  and  complete. 
The  fraudulent  undervaluation  of  imports,  however,  it  is  not 
within  the  power  of  sucli  an  agency  to  prevent."  * 

A  statement  like  tliis  discloses  the  existence  of  a  very 
serious  pitfall  for  us,  when  we  carry  our  comparisons  of 
United  States  trade  farther  iDack  than  1869,  It  may  throw 
some  light  perhaps  on  such  questions  as  the  excess  of  exports 
from  the  United  States  in  recent  years,  which  may  after  all 
be  largely  due  to  the  insufficient  record  of  the  imports.  As 
regards  comparisons  before  18(39,  it  is  immediately  suggested 
that  the  apparently  slow  increase  of  United  States  trade 
between  1860  and  1870  may  in  part  be  apparent  only,  being 
due  to  the  imperfection  of  records,  and  especially  to  a  check 
on  the  record  of  imports  through  the  introduction  of  the  war 
tariff  between  the  two  dates. 

The  second  illustration  I  shall  give  is  from  the  last  number 
of  the  foreign  statistical  abstract,  in  which  it  is  noticed  that 
the  Austrian  Statistical  Bureau  has  lately  begun  to  substitute 
real  for  official  values,  and  tables  are  given  showing  side  by 
side  for  four  years  these  official  and  real  values.  The  subject 
is  of  so  much  interest  that  I  propose,  for  the  sake  of  reference 
in  our  Journal,  to  extract  the  tables.  They  will  be  found  in 
the  Appendix  (Table  I).  The  following  is  a  summary  of  the 
totals : — 


[Values  in  £1,000  sterling— OOO's  omittci.] 

Ijiports. 

Expor.TS. 

Official  Values. 

Real  Values. 

Official  Values. 

Eeal  Values. 

1875     ..      „ 
76     ..      .. 
'77     ..      .. 

'78     ..      .. 

£ 

55.255 

51,807 
54,666 
59,672 

£ 
54,'927 
53,428 
55,526 
55,210 

i.' 

50,447 
50,857 
55,060 

59,970 

£ 

55,086 
59,528 
66,660 
65,469 

Keport  of  Mr,  Wells  for  1869,  pp.  xxix.  to  xxxi. 


THE   USE   OF   IMPOnT    AND    EXPORT   STATISTICS.  147 

The  discrepancies  in  tlie  two  \'alues  are  perhaps  not  very 
serious  in  the  case  of  the  imports,  except  for  the  year  1878 
but  in  the  case  of  the  exports,  tliey  are  serious  all  through, 
the  "  real "  being  5  millions  to  11  millions  more  than  tlu; 
"  official,"  and  the  proportion  of  the  discrepancy  being  from 
10  to  20  per  cent.  In  the  case  of  special  articles,  it  will  be 
observed,  on  referring  to  the  tables,  that  the  discrepancies  are 
still  more  serious,  and  that  the  very  firet  article  on  the  list — 
animals  (except  horses) — is  a  good  instance  of  extreme  differ- 
ences. In  the  imports  of  this  article  the  "real"  are  in 
almost  all  cases  about  twice  the  "  official  "  values,  and  in  the 
exports  they  are  about  four  times  the  "  official "  values. 

I  have  a  third  illustration  to  give  you,  derived  from  French 
experience.  In  1870  the  French  statistical  authorities  began 
to  give  the  countries  of  origin  and  destination.  It  is  im- 
possible, therefore,  in  France  to  continue  from  the  French 
accounts  any  real  comparison  of  French  trade  with  certain 
foreign  countries  from  a  period  before  1870.  The  change  of 
practice  throws  out  all  comparisons,  and  throws  out  especially 
any  comparison  of  French  trade  with  England,  England 
being  a  country  of  transit  to  and  from  France. 

The  conclusion  surely  is  that  in  regard  to  imports  and 
exports,  as  with  most  other  statistics,  comparison  with  distant 
periods  is  not  the  easy  matter  it  seems.  The  changes  in  the 
data  from  time  to  time  interpose  certain  difficulties  in  the 
way  of  comparisons,  wliicli  must  be  recognised  and  met. 
r)esides  these  foreign  instances,  I  have  already  given  a  recent 
illustration  from  the  change  in  our  own  statistics  so  late  as 
1870,  but  the  instances  might  be  increased  indefinitely.  As 
regards  our  own  statistics  especially,  the  imports  were  affected 
by  a  change  irom  official  to  computed  values  in  1854,  already 
referred  to,  involving  quite  as  serious  consequences  as  those 
just  mentioned  in  the  case  of  Austria,     At  a  still  curlier  date 

L  2 


148  THE    USE    OF   IMPORT   AND    EXPORT    STATISTICS. 

also  there  was  a  change  from  official  to  declared  values  in  the 
case  of  the  exports,  involving  large  discrepancies. 

There  is  yet  another  question  as  regards  these  data  which 
I  must  notice  before  passing  on  to  the  next  point.  The 
"  values  "  so  called  when  ascertained,  whether  official,  com- 
puted, or  declared,  or  in  whatever  way  yet  devised  they  are 
ascertained,  are  not  identical  with  the  values  realised  by 
merchants.  They  do  not  profess  to  be  so  when  they  are 
official  or  computed  values,  but  even  when  they  are  declared 
by  the  merchants  themselves,  they  are  still  different  things 
from  the  values  wdiich  the  merchant  realises.  A  merchant 
who  declares  a  particular  quantity  and  value  at  the  time  of 
import  may  be  himself  misled.  A  cargo  of  wool  or  grain 
when  it  comes  to  be  delivered  may  turn  out  less  or  more 
than  invoiced  or  estimated  by  a  slight  percentage,  and  the 
cargo  when  sold  may  realise  less  or  more  per  lb.  or  cwt. ; 
consequently  may  realise  less  or  more  in  the  aggregate  than 
tlie  value  in  the  merchant's  declaration.  Errors  in  the  esti- 
mate of  quantities  may  possibly  tend  to  compensate  each 
other  in  accounts  on  a  large  scale,  and  such  errors  are  also 
liable  to  check  by  the  customs  authorities,  but  the  difference 
between  the  declared  and  realised  values  must  remain  and 
will  not  be  so  surely  compensated.  We  must  always  con- 
sider, then,  when  we  deal  with  these  declared  or  other  values, 
that  they  are  not  necessarily  the  same  as  the  realised  values 
but  are  only  the  best  substitute  we  can  obtain  for  them, 
and  we  must  not  use  them  as  if  they  were  accurate  to  a 
fraction.  Wlien  an  argument  is  used  in  which  that  accuracy 
must  be  assumed  in  order  to  make  it  of  any  value,  we  may 
be  sure  that  the  argument  is  bad,  and  the  person  who  uses  it 
does  not  know  the  necessary  limitations  of  statistics. 

A  second  cause  of  difficulty  in  the  data — operating  more 
especially  when  comparisons  are  made  between  the  imports 


THE   USE   OF   IMPORT    AND    EXPORT   STATISTICS.  149 

antl  exports  of  difrcrcnt  countries — is  to  be  found  iu  tlie 
difference  of  methods  by  which  tlie  data  are  oljtaiued.  I  am 
rcferrinr;-  now  especially  to  the  values.  The  nature  of  the 
difficulty  has  already  1)een  glanced  at  in  reference  to  the 
changes  of  system  in  a  particular  country  itself,  but  the 
systems  used  are  still  so  various  in  different  countries,  that 
the  fact  requires  "to  be  incessantly  remembered  in  any  com- 
parisons. The  most  important  foreign  countries  have  none 
of  them  adopted  our  practice  of  declaring  values,  which,  as 
regards  imports  even  here,  is  comparatively  recent.  In 
France  the  values  of  both  imports  and  exports  are  computed 
according  to  tables  of  prices]  established  by  a  commission  of 
values ;  in  Austria  values  are  partly  computed  and  partly 
official ;  iu  other  countries  there  are  still  official  values, 
modified  in  part  as  to  imports,  where  there  are  ad  valorem 
duties,  by  the  declarations  of  the  importers.  There  is  the 
greatest  variety  of  system.  Not  only  then  do  the  statistics 
of  imports  and  exports  in  all  countries  vary  from  the  values 
actually  realised  by  the  merchants,  to  M-hich  they  ought  to 
approximate,  but  they  probably  A'ary  in  different  ways  and 
degrees  from  the  true  standard,  so  that  a  comparison  of  the 
figures  of  two  different  countries  ought  to  be  made  with  great 
caution.*  One  fact  alone  will  show  what  is  meant.  The 
tendency  of  our  own  method  is  at  least  to  indicate  very 
quickly  any  great  change  in  the  level  of  prices  which  may 
occiu'.     The  statistics  being  made  from  declarations  of  value, 


*  How  great  the  difference  is,  any  one  who  chooses  may  find  out  by 
comparing  tlie  exports  from  England  to  France,  say,  as  tiny  apjiear 
in  the  English  ofticial  returns  of  exports,  with  the  imports  into  Franco 
from  England  as  they  appear  in  the  French  official  returns  of  imports. 
See  also  |rcturu  of  the  trade  between  England  and  France,  according 
to  the  official  statistics  of  the  respective  countries  (No.  405,  Scss.  1881), 
in  which  other  difficulties  in  the  comparison  of  the  returns  of  the  two 
cuimtrics  are  pointed  out. 


150  THE    USE    OP   IMPORT    AND    EXPORT   STATISTICS. 

checked  Ijy  the  daily  use  of  price  lists,  changes  in  price  act 
instantaneously,  even  in  the  returns  as  they  are  issued  month 
by  month.  Bift  it  is  not  so  in  France.  The  monthly  returns 
of  quantities  are  there  valued  according  to  the  last  table 
established  by  the  commission  of  values.  They  do  not  show 
quickly,  therefore,  any  change  in  the  level  of  price.  In 
years  when  prices  are  falling  they  do  not  fall  off  as  the 
English  monthly  returns  do,  and  in  years  when  prices  are 
rising  they  do  not  increase  so  quickly.  Again,  in  countries 
where  of&cial  values  are  used,  the  variations  will  depend  on 
quantities  far  more  than  on  values,  and  the  changes  from 
year  to  year  will  consequently  be  different  from  those  of  a 
country  wliich  has  declared  or  computed  values.  In  com- 
paring two  countries  together,  or  several  countries  with  each 
other,  or  one  country  with  all  others  or  with  a  group,  the 
differences  arising  from  the  original  differences  of  data  must 
be  remembered.  We  must  always  beware  of  pushing  any 
conclusions  too  far. 

I  need  hardly  say  how  much  tliis  conclusion  strikes  at  a 
good  deal  of  reasoning  lately  about  the  comparative  growth 
of  English  foreign  trade,  and  the  foreign  trade  of  other 
countries.  A  country  with  official  values  in  a  time  of  falKng 
prices  would  show  steady  progress,  where  a  country  with 
declared  values,  as  in  the  United  Kingdom,  would  show 
a  falling  off,  although  in  both  countries  the  real  movement 
might  be  much  the  same. 

A  tliird  point  to  be  considered,  in  using  import  and  ex- 
port .statistics,  is  the  periodical  variations  in  price  to  which 
commodities  are  liable.  As  regards  particular  articles  varia- 
tions in  price  do  not  matter  so  much  if  quantities  are  also 
given.  In  showmg  the  progress  of  wheat  exports  from  the 
United  States,  for  instance,  it  would  be  expedient  to  use  the 
record  of  quantities  and  not  of  values.     But  when  articles 


THE    rSE    OF    IMPORT   AND    EXPOKT    STATISTICS.  151 

conic  to  lie  grouped,  values  must  be  used,  as  they  must  also 
be  used  in  showing  aggregate  trade,  and  here  variations  in 
prices  are  most  important.  A  low  range  of  values  in  a  parti- 
cular year  will  make;  the  aggregate  smaller  than  it  would 
otherwise  be,  and  a  high  range  of  values  would  increase  it ; 
and  clearly  this  cause  of  variation  must  l)e  allowed  for. 
How  it  is  to  be  allowed  for  may  be  a  difficult  problem,  but 
the  difficulty  cannot  safely  be  ignored.  When  it  is  considered 
that  the  range  of  difference  in  tlie  aggregate  values  of  the 
exports  of  the  United  Kingdom,  owing  to  difference  of  price 
only,  amounted  to  30  per  cent,  between  1873  and  1879,  we 
can  easily  perceive  that  no  comparison  between  the  two 
years  which  omits  to  take  note  of  the  different  levels  of  price, 
can  be  of  any  value.  This  consideration,  by  the  way,  dis- 
]ioses  altogether  of  the  fair  trade  argument,  which  assumes  a 
decline  of  the  English  export  trade  between  1873  and  1879, 
corresponding  to  the  decline  of  value  only. 

This  difference  of  price  may  also  be  most  material  in  com- 
paring the  relative  progress  of  the  foreign  trade  of  two 
diiferent  countries.  The  articles  of  one  country  may  be 
affected  more  by  a  change  in  the  level  of  ^'alues  than  the 
articles  of  another.  If  the  exports  of  cotton  manufactures, 
for  instance,  constitute  a  larger  part  of  the  export  trade  of 
the  United  Kingdom  than  they  do  of  the  export  trade  of 
France,  and  the  p)rice  of  cotton  manufactures  has  declined 
greatly,  it  would  be  reasonable,  other  things  being  equal,  to 
look  for  a  greater  apparent  reduction  in  English  than  in 
French  exports,  although  perhaps,  as  the  decline  may  have 
been  mainly  due  to  a  decline  in  the  price  of  the  raw  material 
contained  in  the  exports,  the  falling  off  in  the  real  exports  of 
France,  i.e.,  the  exports  of  wliat  is  strictly  the  prnduction  of 
the  country,  may  be  greater  than  the  falling  oil'  in  the  real 
exports  of  England.     In  other  words,  not  only  is  the  com- 


152  THE    USE  OF   IMPORT   AND   EXPORT   STATISTICS. 

parison  of  the  trade  of  the  same  country  in  different  years 
not  simple  but  difficult,  owing  to  this  question  of  price,  but 
a  comparison  of  the  progress  of  two  foreign  countries  may  be 
still  more  complicated  by  the  same  cause  of  variation. 

A  fourth  difficulty  in  using  the  statistics  of  imports  and 
exports,  so  as  to  show  normal  progress  or  retrogression,  arises 
from  the  disturbing  influence  of  great  economic  events.     A 
great  war,  for  instance,  between  two  countries,  may  destroy 
the  foreign  trade  of  one  or  the  other,  or  both — stimulate 
certain  parts  of  the  foreign  trades  of  third  countries,  necessi- 
tate large  loans,  which  may  in  turn  stimulate  the  foreign 
exports  of  the  third  countries  trading,  and  in  general  act  as 
a  cause  of  great  disturbance  to  the  foreign  trade  of  their 
neighbours  as  well  as  themselves.     Such  an  event,  again,  as 
the  gold  discoveries  of  California  and  Australia,  disturbs  the 
normal  course  of  trade  by  causing  an  immense  migration  and 
colonisation.     The  Lancashire  cotton  famine,  itself  one  of  the 
secondary  consequences  of  the  American  civil  war,  disturbed 
the  trade  of  the  civilised  world  for  probably  fifteen  years.    It 
stimulated,  the  growth  of  cotton   in   countries   like  India, 
Egypt,  and  Brazil ;  led  to  a  great  export  of  capital  to  those 
countries  for  their  farther  development ;    induced   a    great 
movement  of  the  precious  metals,  which  in  turn  stimulated 
trade  in  various  ways ;    and  finally,  as  the  stimulant  was 
withdrawn,  and  the  cotton  trade  returned  nearly  to  the  old 
channels  in  which  it  ran  before  1860,  contributed  to  such 
incidents  as  the  failure  of  Alexander  Collie  in  1875  and  the 
City  of  Glasgow  Bank  in  1878,  the  rottenness  disclosed  by 
these  failures  having  been  largely  due  to  the  excessive  in- 
vestment of  capital  in  the  eastern  trade  in  the  times  of  the 
cotton  famine.     The  abnormal  swelling  of  trade  at  one  time, 
in  consequence  of  the  disturbance  of  this  great  event,  and  its 
abnormal  diminution  at  another  time,  when  the  stimulus  is 


THE    USE   OF   IMPORT    AND    EXPORT    STATISTICS.  153 

withdrawn,  have  all  to  be  allowed  for  of  course  in  extracting:;; 
the  real  lessons  as  to  trade  progress  or  tlie  reverse  from 
import  and  export  statistics.  The  payment  of  the  German 
indemnity  in  1871-73  may  be  noted  as  another  disturbing 
event,  tending  to  swell  for  a  time  the  export  trade  of  France 
and  the  countries  which  lent  to  France.  But  it  would  be 
needless  to  enumerate  all  such  causes.  Suffice  it  to  note 
that  the  history  of  the  last  forty  years  alone  comprises  the 
Irish  famine,  and  the  exodus  to  America  which  followed,  the 
"old  discoveries,  the  Crimean  war,  the  Franco- Austrian  war, 
the  Americian  civil  war,  the  Lancashire  cotton  famine,  the 
Austro-German  war  of  18G(),  the  Franco-German  war  of  1871, 
tlie  Franco-German  indemnity,  the  introduction  of  gold  and 
demonetisation  of  silver  in  Germany,  the  resumption  of 
specie  payments  in  gold  in  the  United  States,  and  last  of  all, 
an  unusual  run  of  bad  seasons  for  agriculture  in  England 
between  1875  and  1879  inclusive.  What  a  complicated 
business  it  must  really  be  to  extract  from  the  records  of 
imports  and  exports  of  the  period  any  conclusion  as  to  their 
normal  progress,  or  as  to  the  effect  of  differences  in  the 
economic  regime  of  different  countries  in  promoting  their 
foreign  trade  or  general  welfare,  especially  when  differences 
in  the  volume  of  imports  and  exports  due  to  differences  of 
price  and  changes  in  the  mode  of  obtaining  the  returns  may 
also  have  to  be  allowed  for. 

A  fifth  cause  of  difficulty  in  appreciating  the  figures  of 
imports  and  exports,  especially  for  comparative  purposes, 
arises  from  the  different  character  intrinsically  of  the  foreign 
trade  of  different  countries.  Admitting  that  quantities  and 
values  are  stated  in  precisely  the  same  way,  the  figures  do 
not  mean  the  same  thing  to  each  country.  There  are  at 
least  two  important  diiferences  possible,  which  I  shall  notice, 
viz.,  the  differing  degrees  in  which  the  trade  may  ha  one 


154  THE    USE    OF    mrORT    AND    EXPORT    STATISTICS. 

of  transit  only,  and  the  dili'erent  amoimts  of  the  carrying 
trade  of  different  countries,  as  to  which  there  is  no  precise 
record  of  values,  yet  the  outlay  on  which,  by  a  shipping 
country,  may  be  as  much  an  "  export "  as  the  export  of  grain 
from  a  grain-growing  country  like  the  United  IStates,  which 
happens  to  be  exactly  recorded. 

As  regards  the  degrees  in  which  the  foreign  trade  of 
different  countries  may  be  one  of  transit  only,  I  think  the 
differences  are  really  most  signal.  Some  of  these  differences 
are  on  the  surface.  England  has  on  the  face  of  the  account 
a  large  transit  trade,  the  re-exports,  as  they  are  called,  being 
a  very  large  item.  Belgium  affords  a  still  more  striking  illus- 
tration of  a  large  transit^trade.  But  there  may  be  further 
differences  of  a  vital  character  which  are  not  on  the  surface. 
Any  foreign  articles  once  admitted  into  consumption  in  a 
country,  and  re-made  up  in  any  way,  and  sometimes  with 
little  or  nothing  done  to  them,  are  treated,  when  exported, 
as  exports  of  native  produce  and  manufactures.  You  will 
actually  find  tea,  coffee,  and  raw  cotton  among  the  exports  of 
domestic  produce  from  France.  The  result  is  that  the  ex- 
ports, so-called,  of  domestic  produce  and  manufactures  from 
a  country  which  manufactures  largely,  are,  in  part,  in  the 
strictest  sense  of  the  word,  re-exports.  The  raw  material 
previously  imported  goes  out  in  a  different  guise,  but  it  is 
still  the  same  raw  material.  To  compare  the  exports  of 
native  produce  of  such  a  country,  with  those  of  a  countrj- 
which  does  not  import  raw  material  to  be  re-exported  in  a 
manufactured  form,  we  ought  clearly  to  deduct  from  the 
exports  the  value  of  the  previously  imported  raw  material 
which  they  contain.  The  explanation  specially  applies  to  a 
country  lilce  England,  which  is  a  manufacturing  country 
more  than  any  other,  as  compared  with  countries  like  the 
United  States,  wliich  re-export  in  a  manufactured  form  ^'ery 


THE    USE    OF   IJIPOKT    AND    EXPOllT   STATISTICS.  155 

little  of  Avhat  they  import.  If  a  correction  were  made,  pro- 
bably it  would  appear  that  our  exports  of  domestic  produce, 
exclusive  of  our  carrying  trade,  though  nominally  larger  than 
those  of  any  other  country,  are  not  really  much  larger  than 
some,  and  are  perhaps,  in  some  cases,  exceeded.  The  United 
States,  for  instance,  exported  in  1879-80  about  170  milli(m 
pounds'  worth  of  domestic  produce  and  manufactures,  hardly 
any  raw  material  previously  imported  being  included,  for 
the  manufactures  altogether  are  only  a  few  million  pounds. 
The  United  Kingdom,  on  the  other  hand,  exported  nominally, 
in  1880,  223  million  pounds  ;  but  from  this  sum  a  large  deduc- 
tion must  be  made  for  the  value  of  the  previously  imported 
raw  material  contained  in  it,  perhaps  about  GO  million  pounds  ; 
deducting  this,  the  real  export  of  British  produce  would  be 
only  163  million  pounds,  as  compared  with  170  million 
pounds  from  the  United  States.  Our  exports  per  head 
would  still  be  larger  than  those  of  the  latter  country,  and  a 
special  difference  is  made  by  the  shipping,  which  again 
brings  up  our  total,  but  the  figures  may  serve  to  illustrate 
how  different  the  real  may  be  from  the  apparent  facts. 
"When  the  real  magnitude  of  the  export  trade  of  different 
countries  is  compared  so  as  to  show  their  dependence  on 
foreign  countries  for  markets,  the  point  of  \ic\\  here  referred 
to  is  not  to  be  lost  sight  of. 

A  similar  rectification  is  also  necessary  as  regards  the 
imports,  in  any  comparison  at  least  of  what  is  imported  for 
final  consumption  with  the  exports  of  native  produce.  In 
some  countries  the  whole  imports,  less  the  re-exports,  may 
be  treated  as  imports  for  final  consumption ;  in  the  United 
Kingdom,  to  arrive  at  a  comparable  figure,  we  nnist  deduct 
the  value  of  the  previously  imported  raw  material  contained 
in  the  manufactures  exported,  this  raw  material  being  merely 
the  block  to  which  British  capital  and  labour  are  applied. 


156  THE   USE   OF   IJIPORT   AND   EXPORT   STATISTICS. 

Applying  these  considerations  to  the  case  of  England  and 
other  countries,  we  find  that  our  imports  for  final  consump- 
tion are  still  by  far  the  largest,  but  the  interval  between  us 
and  other  countries  is  considerably  reduced.  Our  gross 
imports  last  year  in  round  figures  were  410  million  pounds, 
but  deducting 

£ 

For  re-exports 65  mlns. 

„    raw  material  previously  imported,)     ^ 
included  in  manufactures  exported  , .    )  " 

Total 125    „ 

we  arrive  at  a  sum  of  285  million  pounds  only  as  the  net 
imports  for  final  consumption  in  the  country.  This  is  a  very 
different  figure,  though  large,  from  the  gross  total  of  410 
million  pounds.*  It  shows  that  our  dependency  on  foreign 
countries  for  supplies,  or  for  a  market  for  our  own  produce, 
is  really  much  less  than  is  sometimes  supposed.  We  are  no 
doubt  dependent  on  them  for  the  "  blocks  "  with  which  we 
work  in  making  for  export,  and  this  is  an  important  fact  by 
itself,  while  the  fact  of  so  much  foreign  produce  going 
through  our  hands,  though  we  do  not  ourselves  consume  it, 
has  its  value  in  the  proper  place  ;  but  our  dependency  in  these 
respects  is  a  different  thing  from  our  requiring  foreign 
markets  where  we  may  sell  what  we  produce,  in  order  to 
buy  what  we  finally  consume.  In  this  respect  foreign 
countries  are  more  nearly  on  an  equality  with  us  than  is 
sometimes  supposed. 


*  This  last  figure,  it  may  be  explained,  is  itself,  strictly  sj^eaking, 
too  small,  not  including  the  transhipment  trade  and  bullion,  which 
ought,  I  think,  to  be  included,  and  which  would  bring  the  total  up  to 
450  million  pounds ;  the  imports  for  final  consumption  being,  however, 
as  stated  in  the  text,  only  about  285  million  pounds. 


THE    USE    OF   IMPORT    AND    EXPORT   STATISTICS.  157 

Another  important  conclusimi  is  to  l)c  drawn  iunn  llii.s 
consideration.  The  exports  of  a  manufacturing  country  may 
be  nominally  affected  by  a  change  in  tlie  value  of  the  pre- 
viously imported  raw  material,  although  there  is  no  real 
change  in  the  native  produce  exported,  or  when  the  real 
change  may  be  the  opposite  of  the  nominal  one.  Say  that  a 
fourth  of  the  exports  consists  of  previously  imported  raw 
material,  then  a  decline  of  50  per  cent,  in  the  value  of  the  raw 
material  would  produce  a  decline  of  12^  per  cent,  in  the  aggre- 
gate exports,  which  would  be  entirely  nominal.  If  at  such  a 
time  the  exports  were  apparently  stationary,  the  real  fact 
would  be  that  they  had  increased  12^  per  cent.,  or  rather 
about  17  per  cent.,  allowing  that  the  increase  really  takes 
place  on  three-fourths  only  of  the  nominal  total.  The  influ- 
ence of  changes  of  price  has  already  been  referred  to  generally, 
but  the  special  influence  of  this  factor  on  the  exports  of 
manufacturing  countries  appears  also  worthy  of  attention. 
It  is  by  no  means  an  immaterial  point.  The  a])])arent  falling 
off  in  the  exports  of  British  produce  and  manufactures 
between  1873  and  1879  is  to  be  accounted  i'or  largely  by  a 
reduction  merely  in  the  price  of  the  raw  cotton — the  block 
to  which  our  industry  was  applied — contained  in  the  manu- 
factures.* To  talk  of  the  decline  between  1873  and  1879 
without  taking  note  of  such  facts  would  clearly  be  to 
mistake  show  for  substance.  Ko  wonder  figures  are  so  oi'ten 
said  to  be  capable  of  proving  anything,  when  pitfalls  like 
these,  which  have  seldom  even  been  referred  to  in  i)ast  dis- 
cussions, are  in  the  way. 

"With  regard  to  shipping,  the  facts  may  be  more  simply 
stated.  A  countiy  with  a  large  carrying  trade  may  export 
little  in  the  shape  of  commodities,  and  yet  be  to  all  intents 

*  See  Report  on  Prices  of  Imports  and  Exports,  C-3079,  Scs.s.  1881. 


158  THE   USE   OF  IMPOKT   AXD   EXPORT   STATISTICS. 

and  purposes  a  considerable  exporter.  Its  outlay  in  wages 
and  provisions  for  ships'  crews,  in  equipping  and  repairing 
ships,  in  insurance  and  renewals,  and  the  profits  it  earns,  are 
all  parts  of  its  export  as  much  as  if  the  export  were  embodied 
and  stored  up  in  a  commodity.  In  any  complete  account  of 
the  foreign  trade,  therefore,  the  carrying  done  by  carrying 
countries,  with  analogous  charges,  ought  to  be  included ; 
otherwise  no  proper  comparison  is  possible  with  countries 
which  have  a  small  shipowning  business.  The  so-called 
foreign  trade  in  the  one  case  is  the  whole  foreign  trade,  in 
the  other  it  is  only  part  of  the  whole. 

I  shall  have  to  make  use  of  this  principle  afterwards  in 
dealing  with  the  question  of  the  balance  of  trade ;  but  it  is 
enough  to  state  it,  I  hope,  to  prove  its  reasonableness.  To 
put  the  point  in  a  concrete  shape,  the  import  and  export 
statistics  of  a  shipowning  country  like  England  do  not  show 
its  foreign  trade,  as  the  imports  and  exports  show  the  foreign 
trade  of  the  United  States,  which  has  only  a  very  small 
shipowning  business. 

That  all  these  questions  are  substantial  and  not  formal, 
may  be  shown  by  a  single  example  of  how  much  our  view  of 
the  foreign  trade  of  the  United  States  as  compared  with  that 
of  England  would  be  altered  by  taking  account  of  them. 
See,  it  is  said,  how  much  of  American  goods  the  United 
Kingdom  imports,  and  how  little  of  British  goods  America 
imports.  This  difference,  I  confess,  would  not,  in  my 
opinion,  be  at  all  material  if  the  real  facts  were  the  same  as 
the  apparent  ones.  Trade  is  well  known  to  be  very  often 
triangular ;  we  may  buy  from  America,  and  send  goods  else- 
where on  American  account,  though  not  directly  to  America. 
But  the  statement  is  itself  untrue  if  we  examine  the  facts 
carefully.  iSTo  doubt  we  record  an  import  of  107  million 
pounds  from  the  United  States,  and  only  record  a  return  of 


THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS.  150 

oS  million  pounds,  showinL;;  an  excess  of  imports  over  our 
t'xports  amounting  to  61>  million  pounds,  wliich  it  is  supposed 
the  Americans  prevent  iis  by  their  tarilf  from  sending  to 
them.  But  people  forget  first  that  our  trade  is  largely  one 
of  transit  both  directly  and  indirectly  through  our  manufac- 
tures. Among  the  articles  we  imjxirt  i'rom  the  United  States 
there  was  £31,784,000  worth  of  raw  cotton  alone  in  1880,  of 
which  directly  as  a  re-export,  and  indirectly  through  our 
manufactures,  we  would  send  away  at  least  four-fifths  or  26 
miUioii  pounds.  Why  should  we  expect  the  United  States 
to  take  goods  directly  from  us  for  this  amount  ?  Surely  the 
countries  which  idtimately  get  the  raw  cotton  directly  or 
indirectly  are  the  countries  whicli  should  pay,  and  they  may 
do  so  in  jiart  directly  as  well  as  through  our  agency,  our 
only  share  being  a  commission  on  the  whole  transaction. 
The  second  fact  is  that  we  export  to  America  in  the  form  of 
carrying  goods  on  American  account,  and  this  item  probably 
amounts  at  the  present  time  to  16  million  pounds  a  year. 
These  two  sums  together — what  we  send  away  elsewhere  of 
raw  cotton  alone  among  articles  we  have  imported  from 
America,  and  what  we  export  to  America  in  the  shape  of 
doing  carrying  work  for  her — go  a  long  way  towards  extin- 
guishing the  apparent  balance  against  us  on  the  import  and 
export  account.  They  amount  together  to  42  million  pounds, 
thus  reducing  the  apparent  balance  from  69  million  pounds 
to  27  million  pounds.  This  is  a  much  smaller  sum  than 
might  at  first  be  expected  from  the  bare  record  of  so-called 
imi)orts  and  exports,  and  shows  how  short  a  way  the  latter 
figures  carry  ns  by  themselves.  As  already  stated,  it  is  of 
no  consequence  whether  there  is  an  exact  balance  or  not,  but 
the  actual  facts  should  be  well  understood,  and  they  cannot 
bo  \inderstood  without  appreciating  the  totally  dilferent 
character  of  the  foreign  trade  of  the  two  countries. 


100  THE    USE    OF   IMPORT    AND    EXPORT   STATISTICS. 

The  above,  let  me  add,  are  not  the  only  points  of  difficulty 
in  the  study  and  use  of  import  and  export  statistics  which 
ought  to  be  considered.  I  have  not  attempted  to  make  an 
exhaustive  catalogue.  I  have  simply  noticed  a  few  points 
which  have  lately  been  brought  under  my  notice  as  material 
or  which  recent  controversies  have  suggested.  They  are 
enough  to  show,  however,  that  there  is  no  royal  road  to  this 
branch  of  learning  any  more  than  to  other  branches.  Tliere 
is  a  great  deal  in  the  study,  and  patience  and  labour  are 
required  of  all  who  would  enter  into  the  field.  That  there 
are  yet  more  difficulties  will  be  apparent  when  we  come  to 
the  special  applications  of  these  statistics  which  I  have 
thought  it  would  be  useful  to  investigate,  viz.,  their  bearing 
on  the  question  of  the  balance  of  trade  or  balance  of  indebted- 
ness between  countries,  and  their  bearing  on  the  points  in 
dispute  in  the  fair-trade  controversy.  We  can  show  not 
only  by  a  statement  of  principles,  but  by  the  actual  steps 
necessary  in  applying  the  statistics,  how  much  consideration 
is  required  in  the  application  of  figures  which  appear  very 
simple,  and  how  difficult  it  is  to  arrive  at  correct  views.  To 
prevent  misunderstanding  let  me  only  add  that,  while  point- 
ing out  the  difficulties  of  the  study,  I  am  saying  nothing  to 
imply  any  doubt  of  conclusions  which  are  arrived  at  after  a 
sufficient  study  of  all  the  facts.  There  are  conclusions  in  all 
studies  which  it  is  hard  for  the  unlearned  to  follow,  but  they 
are  none  the  less  certain  to  those  who  care  to  learn. 


THE   USE   OF  IMPORT   AND   EXPORT   STATISTICS.  IGl 


JIL— BALANCE  OF  TRADE  AND  BALANCE  OF  LN- 
DEBTEDNESS.  THE  GENERALITY  OF  THE 
EXCESS  OF  IMPORTS 

The  first  special  question  I  propose  to  discuss  is  the  appli- 
cation of  the  import  and  export  statistics  to  the  problem  of 
the  balance  of  trade,  and  the  connected  problem  of  the 
balance  of  indebtedness  of  a  country  ;  the  case  I  propose  more 
particularly  to  investigate  being  that  of  the  United  Kingdom. 
Importance  has  come  to  be  attached  to  the  question  in  this 
way.  The  imports  into  the  United  Kingdom,  as  recorded, 
have  in  late  years  shown  a  great  excess  over  the  exports  from 
the  United  Kingdom,  as  recorded.  By  many  this  excess  is 
treated  as  a  trade  balance  against  this  country,  and  without 
much  ado  there  is  also  an  assumption  that  the  country  is 
running  into  debt.  We  are  buying,  it  is  thought,  more  than 
we  can  pay  for,  and  we  can  only  pay  by  an  export  of  securities. 
The  conclusion  itself  seems  so  extravagant  to  any  one  who 
watches  the  constant  issues  of  foreign  securities  on  the 
London  Stock  Exchange,  or  the  constant  lending  by  private 
capitalists  to  foreign  countries,  which  hardly  ever  ceases, 
that  for  one  I  have  never  thought  it  worth  while  to  discuss 
it.  A  statement  was  actually  brought  me  on  one  occasion 
showing  that  the  country  had  become  indebted  to  foreigners 
in  twenty  years  to  the  extent  of  1000  million  pounds,  which 
had  never  been  paid,  and  which  was  all  represented  by  bills 
the  non-payment  of  which  would  bring  about,  some  day,  a 
financial  collapse.  The  writer  was  plainly  unaware  that  the 
whole  amount  of  bills  current  at  one  time  in  the  country, 
in  both  home  and  foreign  trade,  was  under  1000  million 
pounds,  that  the  amount  has  not  been  increasing  lately,  and 
tliat  the  foreign  bills  are  only  about  a  third  or  fourtli  part; 
n.  M 


162  THE  USE   OP  IMPORT   AND   EXPORT   STATISTICS. 

and  I  think  also  he  was  unaware  that  in  the  foreign  trade  it 
is  English  capitalists  who  give  credit  to  foreign  nations,  and 
not  foreign  capitalists  who  give  credit  to  England.  Still  the 
statements  as  to  the  excess  of  imports  have  acquired  a  certain 
amount  of  currency,  and  we  may  see  how  far  they  are  really 
countenanced  by  import  and  export  statistics. 

The  general  statement  of  the  difficulties  of  the  inquiry 
already  made  has  somewhat  cleared  the  ground.  We  are 
prepared  to  see  at  the  very  threshold  that  the  imports  and 
exports  themselves  are  not  exact  to  a  fraction.  There  may 
be  an  error  in  the  data  of  1  or  2  per  cent.,  and  the  values 
may  also  differ  from  the  values  realised  by  merchants. 
Suppose  there  is  a  difference  of  2  per  cent,  only,  and  that  it 
acts  on  imports  and  exports  in  opposite  directions,  increasing 
the  former  and  diminisliing  the  latter,  we  have  a  difference 
at  once  of  about  15  million  pounds  in  the  so-called  excess 
of  imports.  Our  imports,  bullion  and  transhipment  included, 
amount  to  nearly  450  million  pounds ;  our  exports,  bullion 
and  transhipment  also  included,  to  over  300  million  pounds, 
on  all  of  which  2  per  cent,  comes  to  the  sum  of  15  million 
pounds,  as  stated.  The  balance  of  probabilities  is  perhaps 
against  any  variation  of  such  great  magnitude  from  the 
amounts  actually  realised  by  merchants,  while  the  variation 
may  l>e  in  the  opposite  direction,  tending  to  swell  the  excess 
of  imports  ;  but  the  great  effect  of  what  is  really  a  slight 
percentage  should  warn  us  against  reasoning  too  finely. 
Even  the  apparent  amount  by  which  the  recorded  imports 
exceed  the  recorded  exports  may  be  subject  to  great 
reduction. 

The  variations  in  the  level  of  prices  from  year  to  year  are 
also  most  material  in  such  a  question.  A  sudden  rise  or  fall 
of  5  per  cent,  in  the  average  price  of  the  exports  beyond  the 
corresponding  rise  or  fall  in  the  average  price  of  the  imports, 


THE   USE   OF   IMPORT   AND   EXPORT   STATISTICS.  1G3 

•^'oiild  alter  momentarily  the  excess  of  imports  to  a  most 
material  extent,  without  implying  any  real  changes  in  tlio 
general  conditions  of  our  trade.  Similarly,  any  of  the  great 
disturbing  economic  events  referred  to,  two  of  which  have  at 
least  affected  business  during  the  last  few  years,  viz.,  the 
resumption  of  specie  payments  in  America,  and  the  bad 
liarvests  in  western  Europe,  might  largely  alter  for  a  moment 
the  balance  of  trade.  Last,  and  more  important,  the  fact  of 
our  being  a  ship-owning  country,  and  doing  other  duties  in 
connection  w4th  the  foreign  trade  of  the  world,  causes  what 
is  really  a  large  export  of  the  produce  of  our  capital  and 
labour  in  an  unrecorded  form,  and  there  can  be  no  com- 
mencement even  of  a  discussion  of  the  facts  without  a  proper 
allowance  for  tliis  export;  while  the  trade  balance  itself, 
when  properly  ascertained,  is  no  more  than  one  item  in  the 
general  account  of  international  transactions,  esj)ecially  when 
the  country  concerned  is  a  country  like  the  United  Kingdom, 
having  investments  abroad  in  endless  number  and  variety. 
We  see  at  once  from  these  considerations  that  even  to  ascer- 
tain the  exact  excess  of  apparent  imports  over  apparent 
exports  is  no  easy  matter ;  that  this  excess  is  different  from 
the  real  excess  in  the  case  of  a  country  like  the  United 
Kingdom,  which  has  a  large  ship-owning  business  ;  and  that 
the  excess  when  ascertained  is  only  one  item  in  an  inter- 
national account.  We  are  far  enough  already  from  the 
rough-and-ready  handling  which  the  excess  of  imports  re- 
ceives from  writers  in  the  '  Quarterly  Review  '  and  the  like 
authorities. 

CJrappling  now  with  the  subject  more  directly,  what  I 
have  first  to  suggest,  in  accordance  with  a  sound  maxim  of 
statistical  investigation,  is  an  inquiry  how  far  the  excess  of 
imports  is  a  new  or  not  a  general  fact.  There  is  little  use 
in  discussing  it  at  all  imtil  we  look  about  us.     The  question 

M  2 


1C4  THE   USE   OF   IMPORT   AND   EXPORT   STATISTICS. 

of  the  generality  of  the  fact  is  very  soon  settled.  An  excess 
of  imports  is  a  very  common  thing  indeed.  I  have  only  to 
refer  you  to  the  Appendix  No.  II  on  the  point.  In  this  I 
have  had  taken  out  for  a  late  year  in  each  case,  usually  1878 
or  1879,  the  imports  and  exports  of  every  country  in  the 
world  :  there  is  hardly  an  exception,  I  think.  The  result  is 
that  in  forty-five  instances  there  is  an  excess  of  imports,  and 
in  forty-two  instances  an  excess  of  exports.  I  say  nothing 
at  present  of  amounts  in  each  case :  it  is  possible  that  the 
United  Kingdom  is  specially  unfortunate  on  account  of  the 
magnitude  of  the  case.  It  is  clear,  however,  that  the  mere 
fact  of  excess  of  imports  is  a  very  general  one  in  the  experi- 
ence of  nations.     We  do  not  stand  alone. 

Another  general  fact  which  appears  is  that,  taken  altogether, 
the  column  of  imports  is  in  excess  of  the  column  of  exports. 
The  totals  are  : — 

£ 

Imports 1,768  mlns. 

Exports     .;      1,606    „ 

Excess  of  Imports      ..        162     „ 

This  fact  is  surely  very  significant.  It  is  the  same  goods 
substantially  which  are  dealt  with  in  both  cases,  the  fact 
that  it  is  not  the  same  year  which  is  dealt  with  in  all  cases 
making  no  sensible  difference  when  so  many  countries  are 
dealt  with  and  the  years  are  selected  without  any  bias.  But 
although  it  is  the  same  goods  that  are  dealt  with,  they  are 
represented  in  the  one  column  as  162  million  pounds  more 
than  in  the  other  column.  This  of  itself  suggests,  I  think,  a 
natural  reason  for  an  excess  of  imports,  A  difference  like 
this  can  only  be  due  to  a  common  cause,  and  that  cause 
obviously  is  the  cost  of  conveyance ;  the  imports,  being 
mostly  or  often  valued  at  the  place  of  arrival,  include  the 


THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS.  1G5 

cost  of  conveyance ;  the  exports,  being  valued  at  the  place  oi 
departure,  do  not  include  that  cost.  Hence  the  difference 
between  the  two  columns.  In  so  general  an  account,  putting 
all  the  countries  of  the  world  together,  I  can  suggest  no 
other  cause  of  difference.  Of  course,  after  what  I  have 
already  said,  you  will  not  expect  me  to  put  forward  the 
figure  as  absolutely  exact.  We  know  too  little  of  the 
methods  followed  in  more  than  eighty  countries  to  be  sure 
that  the  values  are  comparable  one  with  another.  Still  the 
resulting  difference,  being  in  accordance  with  reasonable  ex- 
pectation, is  evidently  to  be  relied  upon  as  a  fact,  though  we 
cannot  state  a  figure  which  pretends  to  any  exactness. 

It  follows  also  that,  as  there  is  and  must  be  an  excess 
of  imports  in  the  aggregate,  some  particular  countries   are 
entitled  to  the  excess.      These  must  also  be  the   carrying 
countries.     Freight  must  be  the  chief  matter ;  but  the  differ- 
ence cannot  be  wholly  freight,  as  the  figures  include  goods 
which  have  passed  from  country  to  country  by  land,  though 
not  a  large  amount  in  proportion,  as  well  as  goods  which 
have  passed  by   sea.     There  are  also  other  charges  on  the 
conveyance  of  goods  besides  the  freight  paid  to  ship-owners, 
and  all  must  be  included  in  the  difference  here  stated,  or  the 
true  figure  which  it  approximately  represents.    Still,  whoever 
carries,  in  proportion  to  what  he  does  carry,  or  rather  in 
proportion  to  the  outlay  he  contributes  for  the  carrying  and 
the  profit  he  thereby  earns,  must  be  entitled  to  a  correspond- 
ing amount  of  imports.    If  the  account  were  exact,  and  there 
were  no  other  cause  for  an  excess  of  imports  or  exports  in 
particular  cases,  the  table  would  show  not   only  what  the 
excess  of  imports  was  in  the  aggregate,  but  what  were  the 
carrying  nations  and  how  much  each  received.     The  table, 
however,  does  not  show  this.     No  doubt  the  countries  with 
an   excess   of    imports   are   largely   carrying   nations :    the 


166  THE   USE   OF  BIPOET   AND   EXPORT   STATISTICS. 

United  Kingdom,  Norway,  Denmark,  Germany,  Holland, 
Trance,  Italy ;  but  there  are  other  countries  with  an  excess 
of  imports,  while  in  some  cases,  perhaps,  the  excess  is  not  so 
large  as  that  to  which  the  share  of  the  country  concerned  in 
the  carrying  trade  would  apparently  entitle  it.  This  suggests 
obviously  that  besides  the  cause  which  produces  an  excess  of 
imports  in  the  aggregate,  the  excess  varies  in  the  case  of 
particular  countries,  or  becomes  even  an  excess  of  exports, 
owing  to  another  cause.  That  cause  I  have  to  suggest  is 
that  countries  are  either  borrowing  or  lending  in  their  inter- 
national transactions,  or  that  some  are  receiving  while  others 
are  paying  interest.  The  result  is  that  if  we  add  the  excesses 
of  imports  on  the  one  side  and  put  against  them  the  excesses 
of  the  exports  on  the  other,  the  aggregate  excesses  of  imports 
are  found  to  be  286  millions,  and  the  aggnregate  excesses  of 
exports  12-i  millions,  the  difference  being  the  net  excess  of 
imports  already  stated.  The  excesses  of  exports  in  certain 
cases  amounting  to  124  millions,  would  also  imply  that  in 
the  international  transactions  of  the  w^orld,  unless  the  figure 
should  be  modified  by  including  the  bullion,  as  we  ought  to 
do  for  this  purpose,  but  which  I  have  found  it  impossible  to 
do  in  all  cases,  a  sum  of  that  amount  was  passed  as  the 
balance  of  the  various  loan  and  interest  transactions  of  the 
world.  The  total  amounts  lent  and  the  total  amounts  joaid 
for  interest  may  both  have  been  larger,  and  there  is  nothing 
to  indicate  the  amounts  ;  but  of  the  fact  of  a  balance  having 
to  be  passed,  there  can  be  no  question.  While  we  conclude 
then,  from  the  general  fact  of  an  excess  of  imports,  that  it 
corresponds  to  the  cost  of  conveyance  in  international  trade, 
it  is  quite  possible  that  the  countries  entitled  to  share  in  it 
may  show  a  smaller  excess  than  they  would  otherwise  do 
through  their  lending  to  foreign  countries,  or  may  show  a 
larger  excess  through  their  receiving  interest  or  borrowing  on 


THE    USE    OF   IMPORT    AND    EXPORT   STATISTICS. 


1G7 


balance  ;  wliile,  on  the  contrary,  non-carrying  nations  may 
sliov/'  a  small  excess  of  exports,  or  even  an  excess  of  imports, 
in  conse(j^uence  of  the  balance  of  their  other  transactions. 
The  figures  in  the  case  of  each  country  are  no  guide  to  the 
state  of  its  general  account  witli  other  nations. 

It  is  to  be  observed,  however,  that  there  is  a  geograpliical 
distribution  to  some  extent  of  the  countries  having  an  excess 
<jf  imports  or  of  exports  respectively.  The  nations  in  the 
tables  are  classified  geographically,  with  a  cross  division  for 
the  British  empire  and  for  the  rest  of  the  world ;  and  the 
result  is,  that  wliile  Europe  shows  an  enormous  excess  of 
imports,  viz.  : — 


United  Kingdom  and  Malta 
Other  countries  of  Europe 


Total , 


£ 
1 1 2  mlns. 

254    „ 


the  other  quarters  of  the  ^^-orld  show  on  the  Mdiole  an  excess 
of  exports,  viz. : — 


Excess  of 

Imports. 

Exports. 

Africa — 

British  empire     

Other  countries 

• 

Ada — 

British  empire     

Other  countries 

Auslriiluni'i — 

British  empire     

Other  countries 

America  atid  West  Indies — 

British  empire     

Other  countries 

Mlns. 
£ 
4 

G 
1 

Mlns. 
£ 

4 
7S 

Deduct 

11 

1 1 

3']xccss  of  exports 

' 

168  THE   USE   OF  IMPORT  AND   EXPORT   STATISTICS. 

The  figures  at  least  suggest,  I  think,  that  it  is  the  old 
countries — the  homes  of  capital — which  have  to  receive 
interest,  and  the  new  countries — principally  the  United 
States — which  have  to  pay  it.  Certainly  no  inference  can 
be  drawn  to  the  effect  that  it  is  the  countries  with  an  excess 
of  exports  which  are  the  most  prosperous,  the  list  comprising 
Peru  and  other  South  American  States,  which  have  lately 
been  passing  through  the  most  serious  calamities.  The  most 
singular  fact  disclosed  by  the  table  is  perhaps  the  excess  of 
imports  in  the  case  of  the  Australian  colonies ;  but  this  is 
partly  to  be  accounted  for,  I  believe,  by  the  fact  of  the  con- 
tinuous lending  of  this  country  to  Australasia,  which  has 
been  going  on  for  many  years  past.  Its  natural  place  would 
have  been  with  America  and  the  new  countries  generally. 
The  facts  as  to  the  Cape  Colony  give  rise  to  a  similar 
remark. 

I  shall  have  to  return  to  the  figures  shortly  in  reference  to 
the  question  of  the  charges  for  conveyance  to  which  the 
United  Kingdom  is  entitled ;  but  I  pass  on  to  remark  that 
as  the  fact  of  an  excess  of  imports  is  general,  it  is  also  by  no 
means  new,  either  in  the  case  of  the  United  Kingdom  or  of 
the  world  generally.  With  regard  to  the  United  Kingdom, 
the  fact  is  tolerably  well  known ;  but  to  make  this  paper 
complete,  I  have  included  in  the  Appendix  (Table  III)  a 
statement  of  what  the  excess  has  been  since  1854.  The 
following  "is  a  summary  of  this  table  in  three  years' 
periods : — 


THE    USE   OF   IMPORT    AND    EXPORT    STATISTICS. 


1G9 


Excess  of  Iinpoi-fs,  and  Proportion  to  Total  Imports  and  Exports, 
includuKj  Bullion  a7id  Specie,  1854-80. 

[In  millions  of  ])oun(ls.] 


Total  Imports  and 

Exports.* 

Excess  of  Imports. 

Amount.* 

Per  Cent,  of 
Imports  and  Exports, 

18.54-56     

'57-50     

'60-62     

'68-65     

'66-68     

'69-71     

72-74     

75-77     

'78-80     

£ 

330 
386 

432 
523 
566 

617 

732 

713 
690 

£ 
37 
31 
53 
60 
67 
61 
61 
121 
119 

ir2 

8-0 

12-3 

II-5 

u-8 

lO'O 

8-3 
i7'o 

T7-2 

Averages  of  three  years. 


Thus  we  have  always  had  an  excess  of  imports  into  this 
country.  Of  late  years  it  has  been  larger  in  amount  and  in 
proportion  to  the  imports  and  exports  recorded  than  formerly, 
but  the  only  novelty  to  be  inquired  into  is  clearly  the  increase 
uf  the  excess  :  (1)  whether  it  is  apparent  or  real — a  most  im- 
portant inquiry,  as  the  mode  of  valuing  the  imports,  we  have 
seen,  was  changed  in  1870,  and  in  1871  there  is  a  sudden 
and  remarkalde  increase  in  the  imports,  and  a  still  more 
remarkable  increase  in  the  re-exports  ;  and  (2)  whether  there 
are  any  circumstances  to  account  for  a  real  increase  of  the 
excess  of  imports,  such  as  an  unusual  diminution  of  our 
current  lending  to  foreign  countries,  or  an  unusual  increase 
of  sliip-owning  business  making  our  unrecorded  exports  un- 
usually large.  At  present  I  do  no  more  than  suggest  these 
answers,  the  main  point  to  be  considered  being  that  the 
excess  of  imports,  and  that  on  a  very  large  scale  in  proportion 
to  our  whole  foreign  trade,  is  itself  no  novelty. 


170 


THE   USE   OF   IMPORT   AND    EXPORT   STATISTICS. 


The  excess  of  imports,  as  I  have  stated,  is  also  no  novelty 
in  the  aggregate  trade  of  the  ^vorld.  On  this  head  I  have  to 
quote  the  figures  given  by  Dr.  Von  Neumann-Spallart,*  to 
■whom  I  am  indebted  for  some  of  the  figures  in  the  second 
table  of  the  Appendix,  viz. : — 

Imports  and  Exports  of  the  World. 
[In  millions  sterling,  converting  tlie  mark  at  20  per  £.] 


Imports. 

Exports. 

Excess  of  Imports. 

£ 

£  ■ 

£ 

1867-68   ..      .. 

1,165 

1,045 

120 

'69-70   ..      .. 

1,266 

1,100 

166 

'72-73   ..      .. 

1.554 

1,334 

220 

'74-75   ..      .. 

1,450 

1,289 

161 

'76 

1,493 

1,296 

197 

'78 

1,508 

1,359 

149 

'79 

1,571 

1,355 

216 

Thus  an  excess  of  imports  in  the  aggregate  trade  of  the 
world  is  a  permanent  fact.  There  is  nothing  new  in  it. 
There  is  also  some  proportion  between  the  aggregate  trade 
and  the  excess  of  imports.  The  more  trade  tliere  is  the  more 
charges  for  conveyance,  though  the  j)i'Ogression  is  of  course 
not  quite  constant,  and  the  figures  themselves  are  of  course 
somewhat  incomplete,  which  makes  it  difficult  to  exhibit  a 
regular  progress  from  year  to  year.f 


*  Uebersichten  der  Weltwirthscliaft,  von  Dr.  P.  X.  vou  Neumann- 
Spa]  lart.  Jahrgang  1880.  Stuttgart.  Verlag  von  Juhus  Maier. 
1881.     (See  p.  360.) 

t  It  will  be  observed  that  the  annual  amounts  here  are  in  no  case 
so  large  as  the  annual  amount  in  Table  II  of  the  Appendix.  Some  of 
the  figures  in  the  latter  table,  however,  are  for  a  year  later  than  1879, 
and  the  figures  I  have  used  also  include  the  bullion  and  specie  as 
much  as  possible,  which  are  not  included,  apparently,  in  Dr.  Spallart's 
figures. 


THE    USE   OF   IMPORT    AND    EXPORT    STATISTICS.  171 


IV.— SUBJECT  CONTINUED:  HOW  THE  EXCESS 
OF  nirOETS  INTO  THE  UNITED  KINGDOM  IS 
TO  BE  ACCOUNTED  FOR. 

Having  thus  brought  out  the  facts  of  the  generality  and 
want  of  novelty  in  the  excess  of  imports,  and  having  suggested 
as  a  necessary  cause  of  it  the  cost  of  conveyance  between 
countries  which  must  always  exist,  and  as  a  contributing 
cause  the  settlements  of  international  accounts  tlu-ough  the 
remittance  of  loans  or  interest  on  money  previously  borrowed, 
I  propose  now  to  inquire  more  particularly  with  reference  to 
the  United  Kingdom  how  the  excess  is  to  be  accounted  for. 

How  much,  to  begin  with,  is  annually  due  to  us  as  a  ship- 
owning  and  carrying  nation  ?  As  we  have  seen,  there  is  no 
reason  why  the  actual  excess  of  imports,  in  the  case  of  a 
ship-owning  nation,  should  correspond  to  the  sum  it  earns  in 
the  carrying  trade ;  the  actual  excess  may  be  less  or  more 
than  that  sum ;  but  the  sum  is  nevertheless  an  item  in  the 
account  just  as  much  as  the  so-called  exports  on  the  one 
side  or  the  imports  on  the  other.  I  have  to  call  attention  to 
the  words  ship-owning  and  carrying.  According  to  the 
definition  already  given,  the  question  is,  what  is  the  amount 
of  our  contribution  to  the  cariying  of  the  world's  goods  ? 
and  though  it  is  mainly  a  ship-owner's  question,  it  is  not 
wlioUy  so.* 


*  Tlio  following  propositions  appear  to  cover  tlio  various  cases  of 
an  excess  of  imports  or  exports  arising  in  conucctiou  with  cai-rying 
operations : — 

1.  A  non-carrying  nation,  in  tbe  absence  of  borrowing  or  lending, 
ought  to  sliow  in  its  accounts  an  e(|uality  between  imports  at  tho 
place  of  arrival,  and  exports  at  the  i)lact'  of  tk'i^arture. 

2.  A  nation  cai-ryiiig  half  its  foreign  trade  ought  to  have  au  excess 


172  THE   USE   OF  IMPORT   AND   EXPORT   STATISTICS. 

Eeplying  to  this  question,  I  propose  to  take  the  facts  as  to 
ship-owning  first,  and  to  use  first  in  a  general  view  of  the 
subject  the  excess  of  imports  already  shown  in  the  aggregate 
trade  of  the  world.  Assuming  this  excess  of  1G2  million 
pounds  to  represent  approximately  the  cost  of  conveyance* 
how  much  of  it  should  fall  to  the  share  of  the  United 
Kingdom  ?  I  have  to  suggest  first  of  all,  for  reasons  to  be 
given  afterwards,  that  about  32  million  pounds  of  the  amount, 
or  rather  less  than  2  per  cent,  on  the  aggregate  trade,  re- 
present miscellaneous  charges  and  commissions,  which  all 
form  part  of  the  cost  of  conveyance,  and  of  which  the 
English  share  may  be  put  at  one-half,  or  IG  million  pounds. 
Deducting  this  32  million  pounds,  the  sum  of  130  million 
pounds  is  left  as  the  amount  due  for  freight.  How  much 
should  fall  to  the  share  of  England  ?  It  would  also  be 
natural  in  reply  to  compare  the  mercantile  tonnage  of 
England  with  the  tonnage  of  the  rest  of  the  w"orld,  and 
divide  the  130  million  pounds  between  them  in  proportion. 
Eor  all  practical  purposes  England's  proportion  may  be  put 
at  something  like  55  percent,*  and  assuming  this  proportion, 
the  division  would  be  as  follows : — 


of  imports  equal  to  the  cost  of  carrying  the  goods  one  way ;  and  so  in 
proportion  for  whatever  its  contribution  to  carrying  may  be. 

3.  A  nation  carrying  its  whole  foreign  trade  will  have  an  excess  of 
imports  equal  to  the  cost  of  carrying  the  goods  both  ways. 

4.  A  nation  carrying  for  others  is  entitled,  in  addition,  to  an  excess 
of  imports  equal  to  the  freight  earned,  less  any  expenses  incurred 
abroad.  Any  nation  contributing  to  carriage  will  also  have  something 
to  receive. 

*  This  is  a  rough  deduction  from  the  tables  in  the  return, "  Progress 
of  British  Merchant  Shipping,"  No.  125,  Sess.  1881.  The  calculation, 
(for  1879)  in  millions  of  tons  is : — 


THE   USE   OF   IMPORT   AMD   EXPORT   STATISTICS. 


173 


Tor  Cent. 

Proportion. 

United  Kingdom 

Other  countries 

55 

45 

Mlns. 
£ 

7U 

58i 

Total     

— 

130 

The  sum  of  71  millions  sterling  is  certainly  enormous. 
Still,  the  figures,  whatever  they  may  be  worth,  are  not  cooked 
in  any  way.  I  have  simply  taken  the  excess  of  imports  as  I 
liave  found  it,  and  made  a  proper  deduction  as  I  think,  so  as 
to  leave  only  what  is  due  to  freight,  and  I  have  then  merely 
divided  this  freight  between  England  and  other  countries  in 
proportion  to  their  tonnage.  As  regards  the  actual  amount 
of  this  freight,  it  cannot  be  called  extravagant.  On  the 
total  imports  of  the  world,   as  shown  in  Table   II  of  the 


Sailing. 

Steam. 

Total. 

Per  Cent. 

of 

Total. 

Amount. 

Equivalent 

in 
Sailing  tons. 

Tonnage  of — 
United  itingdom 
Ik'.st  of  British  empire 

4-0 

2"0 

2-5 
0-2 

I0"0 

0-8 

14-0 

2-8 

50 
9 

Foreign  countries     .. 

6-0 

7-2 

2-7 
11 

lo-S 

4'4 

168 
IIG 

59 
41 

Total       ..      .. 

13-2 

3-8 

15-2 

28-4 

100 

Thus  the  proportion  of  ships  belonging  to  the  United  Kingdom 
alone  is  50  per  cent.,  and  allowing  a  certain  jiroportion  of  colonial 
ships  to  be  owned  in  the  United  Kingdom,  the  figure  of  55  per  cent, 
in  tlio  text  seems  near  the  mark.  Since  187'J  our  proitortion  has 
largely  increased. 


174         THE  USE  OP  niPorvT  and  expokt  statistics. 

Appendix,  it  amounts  to  a  cliarge  of  7^  per  cent,  only,  and 
on  the  total  tonnage  of  the  world,  sailing  and  steam  together, 
it  would  show  a  gross  earning  of  no  more  than  £8  per  ton. 

As  regards  the  division  between  England  and  other 
countries,  it  would  perhaps  be  necessary  to  make  a  correction 
for  the  amount  of  outlay  by  English  ships  in  foreign  ports, 
in  excess  of  the  outlay  by  foreign  ships  in  English  ports  ; 
but  the  outlay  of  this  sort,  I  believe,  from  a  consideration  of 
the  other  outlays  in  earning  freight,  cannot  exceed  about  a 
sixth  part  of  the  total  earnings.  Deducting  a  sixth  from  the 
above  sum  of  71^  millions,  would  leave  about  60  millions 
as  the  sum  due  to  the  United  Kingdom  for  freight.  Tliis 
would  be  our  share  of  the  130  millions. 

Adding  together  the  60  millions  for  freight  and  the  16 
millions  for  miscellaneous  charges  and  commissions,  we 
arrive  at  a  total  of  76  millions,  as  the  share  of  the  above 
162  millions,  for  cost  of  international  conveyance  annually 
due  to  the  United  Kingdom  at  the  present  time. 

These  figures  are,  of  course,  too  uncertain  to  be  relied 
upon  by  themselves,  but  they  are  not  without  corroboration. 
I  have  first  to  refer  to  various  authorities  who  have  dealt 
especially  with  the  amounts  of  freight  earned  in  the  direct 
trade  of  the  United  Kingdom.  Mr.  Bourne,  in  a  paper  read 
before  the  Society,  and  printed  No.  3  of  the  volume  already 
referred  to,  was  one  of  the  first  to  grapple  with  the  problem. 
His  method,  I  believe,  was  incomplete,  but  some  of  his 
statements  were  most  interesting.  One  of  them  (p.  63)  is  to 
the  effect  that  11  per  cent,  on  the  value  of  our  imports 
would  be  a  fair  average  allowance  for  freight.  The  imports 
are  now,  roughly  speaking,  over  400  millions  a  year,  on 
which  11  per  cent,  would  be  44  millions,  and  of  this  44 
millions  the  English  share,  dividing  the  sum  in  the  pro- 
portion of  the  entries  of  English  and  foreign  ships — 70  per 


THE    USE   OF   IMPOKT    AND    EXPORT   STATISTICS.  175 

cent,  to  30  per  cent. — would  1)C  very  nearly  ."1.  millions. 
Similarly  Mr.  Bourne  gives  the  freight  on  exports  as  20s. 
per  ton  for  sailing  vessels,  and  30s.  per  ton  for  steamers,  at 
^vhich  rates  in  1880,  the  clearances  of  British  sailing  vessels 
being  3,182,000  tons,  and  of  steamers  15,085,000  'tons,  the 
freight  on  exports  in  liritish  bottoms  wonld  be  nearly  27 
millions.  The  total  for  imports  and  exports  is  58  millions. 
Adding  a  sum  for  freights  earned  by  British  ships  in  the 
indirect  trade,  which  must  be  enormous,  and  again  making 
a  deduction  for  outlays  in  foreign  ports,  we  should  still,  on 
this  showing,  get  well  on  to  the  figure  of  GO  millions,  if  not 
beyond  it. 

I  must,  of  course,  allow  that  Mr.  Bourne  was  writing 
several  years  ago,  and  freights  are  a  variable  item ;  but  I  do 
not  believe  that  one  year  with  another  they  have  fallen 
permanently  below  the  level  of  price  he  quoted.  Some 
freights  have  fallen,  but  not  the  run  of  freights  to  any 
material  extent.  There  has  been,  in  truth,  no  large  margin 
for  a  fall  in  freights,  the  cost  of  working  being  itself  from 
70  to  90  per  cent,  of  the  income,  and  the  absolute  outlay  per 
ton,  though  it  tends  to  diminish  with  the  increasing  size  of 
vessels,  not  having  diminished  very  greatly  from  the  time 
;Mr.  Bourne  wrote. 

Mr.  Ne\\Tnarch  again,  in  a  paper  read  to  this  Society  in 
1878,*  proposes  to  deduct  5  per  cent,  from  the  imports  and 
add  10  per  cent,  to  the  exports  for  all  charges  of  conveyance. 
These  amounts  on  our  present  trade  would  come  to  about  50 
milli(jns.  Mr.  Ncwmarch  does  not  indicate  what  he  thinks 
the  other  charges  as  distinguished  from  freight  would  be,  and 
does  not  enter  into  the  question  of  outlays  in  foreign  ports  or 
of  work  done  by  British  vessels  for  foreign  countries.     The 


Statistical  Society'a  Journal,  vol.  xli,  pp.  218-20. 


176  THE   USE    OF  IMPORT   AND   EXPORT   STATISTICS. 

sum  of  50  millions  which  he  actually  arrives  at  for  the  direct 
trade  of  the  United  Kingdom  alone,  appears  to  corroborate  the 
notion  that  the  sum  of  00  millions  for  the  whole  earnings  of  our 
mercantile  fleet,  less  all  outlays  abroad,  is  not  wide  of  the  mark. 
In  the'  same  paper  Mr.  Newmarch  quotes  a  letter  of  Mr. 
McKay,  of  Liverpool,  who  estimates  the  freights  earned  in 
British  bottoms  at  30s.  per  ton  for  imports  and  20s.  per  ton 
for  exports.*  These  rates  on  the  tonnage  of  1880,  converting 
the  net  register  ton  into  gross  tons  in  the  proportion  of  two- 
thirds  to  1,  would  give : — 

£ 

Imports 37  mlns. 

Exports 27    „ 

Total..      ..     64    „ 

Again,  there  is  no  mention  of  any  outlays  abroad,  but  the 
figures  amply  support  those  already  stated.  The  sum  these 
authorities  deal  with,  it  must  always  be  remembered,  is  for 
the  direct  trade  of  the  United  Kingdom  alone ;  and  the  figure 
of  60  millions  already  given  represents  our  whole  earnings 
from  freight,  less  actual  outlays  abroad  in  earning  it. 

Quite  lately  I  have  obtained  a  calculation  from  a  ship- 
owning  friend  (whom  I  shall  call  A,  as  I  have  many  other  facts 
from  ship-owners,  whose  names  I  am  not  at  liberty  to  mention, 
and  to  whom  I  shall  assign  the  letters  of  the  alphabet),  witli 
reference  to  average  freights  at  the  present  time.  His  calcu- 
lation is  that  on  the  weights  of  goods  actually  imported  and 
exported  in  the  American  trade,  freights  come  to  about 
27s.  6d.  and  20s.  respectively.  It  is  not  quite  clear  what 
these  weights  are,  or  whether  they  would  be  represented  by 
the  tonnages  entered  and  cleared ;  but  assuming  the  latter  to 

*  I  am  unable  to  identify  the  tonnage  actually  quoted  by  Mr.  McKay. 


THE    USE    OF   niPOKT    AND   EXPOET   STATISTICS.  177 

be  the  case,  find  converting  the  net  registered  tons  into  gross 
tons,  as  is  done  above,  and  assuming  also  that  the  American 
trade  is  a  good  average  of  the  whole  foreign  trade,  as  I  believe 
•we  may  do,  we  get  the  following  figures  : — 

£ 

Imports 34  mluf5. 

Exports 27     „ 

Total..      ..     6r     „ 

This  is  substantially  the  same  figure  as  tliat  arrived  at  on 
Mr.  ]\IcKay's  calculation.*  It  manifestly  supports  the  con- 
clusion that  GO  millions  at  least  is  earned  by  our  shipping, 
after  deducting  all  outlays  abroad,  in  the  direct  and  indirect 
trades. 

I  propose  now,  however,  to  deal  more  directly  with  the 
matter.  The  tonnage  of  the  British  mercantile  fleet  being 
known,  how  much  per  ton,  according  to  direct  evidence,  does 
the  sailing  ship  and  the  steamer  earn  on  the  average,  and 
how  much  ought  to  be  the  deduction  for  outlay  abroad  ?  I 
have  many  figures  on  this  head  to  submit  to  you,  and  I  must 
crave  your  patience  on  account  of  the  very  great  importance 
of  the  subject. 

I  have  first  to  call  your  attention  to  Appendix  ISTo.  IV,  in 
wliicli  there  are  certain  tables  extracted  from  the  'Statist'  news- 
paper of  26th  November  last  [1881].  These  tables  summarise 
the  accounts  of  our  principal  joint-stock  shipping  companies 
in  a  form  which  was  partly  of  my  own  suggestion,  with  a 


*  It  is  hardly  worth  while  cumbering  the  paper  with  the  details, 
but  I  have  made  a  calculation  of  the  actual  weights  of  goods  imported 
and  exported,  and  tlios^e  charges  for  freights  would  bring  out  a  sum 
on  such  weights  of  50  niillion  i)0unds.  1  have  also  to  call  attention, 
on  this  head,  to  Ajjpendix  X,  showing  the  amount  of  weights  carried 
in  our  direct  foreign  trade,  as  far  as  weights  can  be  stated. 

n.  N 


178  THE   USE   OF  niPOET   AND    EXPORT   STATSTICS. 

\iew  to  the  present  paper,  though  the  tables  themselves  are 
not  my  own  work,  but  the  work  of  a  gentleman  already  well 
known  to  many  of  you,  Mr.  Wynnard  Hooper,  whose  analysis, 
I  think,  does  liini  great  credit.  The  points  in  this  statement 
to  which  I  desire  to  call  attention  are  these : — 

a.  The  capital  value  of  the  fleets  of  eight  companies,  in- 
cluding some  of  the  largest  and  best,  but  also  including  one 
or  two  of  a  second  class,  comes  out  on  the  average  at  £16  13s. 
per  ton  gross,  which  is  not  less  than  about  £25  per  ton  net, 
taking  the  net  as  two-thiixls  of  the  gross,  and  the  real  propor- 
tion being  less.  The  range  of  value  is  from  £13  2s.  to 
£18  12s.  per  ton  gross,  or  from  £19  13s.  to  £27  16s.  per  net 
registered  ton.  These  are  much  lower  values  in  all  cases,  I 
believe,  than  the  ships  could  be  built  for.  They  are  not 
extreme  values. 

&.  The  gross  income  of  six  of  the  above  companies,  repre- 
senting fairly  well  the  average  of  the  nine,  works  out  at 
£14  12s.  per  ton  gross,  or  about  £22  per  net  registered  toiL 
This  is  a  percentage  on  the  value  of  about  88  per  cent.  The 
percentage  on  the  value  in  each  case  is :  — 

Per  Cent. 

Peninsular  and  Oriental      91 

Pacific  Steam        92 

EoyalMail 70 

Cunard 100 

General  Steam      &4 

Mercantile  Steamsliij) 59 

Thus  the  lowest  value  per  net  registered  ton  is  about 
£20  and  the  lowest  proportion  of  gross  earnings  about  60  per 
cent. 

c.  The  proportion  of  expenditure  to  gross  income  works 
out  as  follows : — 


THE  USE   OF   lilPORT    AND   EXPORT   STATISTICS. 


170 


Per  Cent. 

Peninsular  and  Oriental  ,.   92*4 

Pacific  Steam     92'6 

Eoyal  Mail 99-3 


Per  Cent. 

Cunard      83'9 

General  Steam 91 'i 

Mercantile  Steamship    ..  87*7 


The  average  of  the  six  is  about  91  per  cent.,  and  the  lowest 
is  about  84  per  cent.  As  the  gross  earnings  are  a  large  per- 
centage of  the  value,  so  the  gross  outlay  is  also  a  large 
percentage  of  the  gross  earnings. 

The  outlay  per  ton  gross  amounts  to  £13  7s.  on  the  average 
of  the  six  companies,  equal  to  about  £20  per  net  registered 
ton.  The  value  being  £25,  this  shows  an  average  outlay  in 
proportion  to  the  value  of  80  per  cent.     • 

(I.  In  tlie  case  of  three  of  the  principal  companies  practi- 
cally little  more  than  half  the  gross  earnings  are  from  freights, 
but  they  earn  from  freights  alone  £2,110,000,  or  about  £8  per 
gross  ton,  equal  to  about  £12  per  net  registered  ton.  In  any 
case  a  part  of  their  income  from  passengers,  probably  the 
larger  part,  being  for  the  conveyance  of  foreigners,  or  of 
persons  travelling  on  foreign  account,  has  the  same  effect  on 
the  international  account  as  a  charge  for  conveyance  of  goods. 
It  is  a  debit  to  foreign  nations,  and  a  credit  to  the  ship-owner 
in  tliis  country. 

e.  The  average  expenditure  per  ton  is  stated  under  several 
heads  for  each  of  the  three  principal  companies,  and  is  in  all 
very  nearly  alike,  the  mean  being  as  follows : — 


Per  Ton  Gross. 

Per  Ton  Register. 

Coal       

Pay  of  Crews        

Provisions 

Eepairs  and  Renewals 
Insurance  and  dei)rcciation 
Other  expenses 

£       s. 

I    10 
I      s 
I    12 

4       S 

£      s. 
3    18 
2      5 
2      2 

2  8 

3  3 
6    12 

13     12 

'2')      8 

2i    2 


180  THE   USE    OF   niPORT    AND   EXPORT    STATISTICS. 

I  postpone  drawing  any  deductions  from  the  figures,  as  I 
have  other  figures  to  give,  but  I  may  note  before  passing  that 
the  figures  as  to  the  eight  companies  comprise  442,000  tons 
gross  of  shipping ;  the  figures  as  to  six,  400,000  tons ;  and 
the  figures  as  to  three,  278,000  tons.  A  considerable  part  of 
the  steam  mercantile  fleet  is  thus  represented. 

I  have  next  to  direct  attention  to  the  series  of  statements 
respecting  different  classes  of  ships  in  Appendix  No.  V.  The 
statement  B  is  exactly  parallel,  it  will  be  observed,  to  the 
statements  above  quoted,  relating  to  the  leading  companies 
which  publish  their  accounts,  with  the  differences  that  only 
the  outlay  is  stated,  and  that  the  outlay  abroad  is  distinguished 
from  the  outlay  at  home.  The  general  result  is  that  on  a 
somewhat  higher  valuation,  the  steamers  being  valued  at 
£20  per  ton  gross,  or  £31  per  ton  net  register,  the  outlay  is 
also  about  65  to  70  per  cent,  of  the  value,  or  £21-88  per 
registered  ton  in  the  one  case  and  £20"34  in  the  other  case. 
The  amount  spent  per  ton  on  wages,  coal,  and  other  items  is 
less  than  in  the  case  of  the  companies  which  publish  their 
accounts,  but  the  total  outlay  is  swollen  by  a  large  charge 
for  depreciation. 

With  regard  to  the  distribution  of  the  expenses  between 
this  country  and  abroad,  the  point  to  note  seems  to  be  that 
the  total  abroad  in  the  one  case  is  £7"70  per  ton  and  in  the 
other  £7'60  per  ton,  or  about  35  per  cent,  of  the  total  outlay. 
The  amount  is  chiefly  for  port  expenses  and  Suez  Canal 
expenses. 

The  next  statement,  C,  also  relates  to  a  steamer,  but  of  a 
different  class  from  the  above,  the  value  being  £19  only  per 
net  registered  ton,  and  the  gross  outlay  £14  3s.  per  ton.  The 
wacres  are  a2;ain  much  lower  than  in  the  case  of  the  first-class 
steamers,  but  the  outlay  for  coal  is  as  much  as  £5  per  ton. 

The  next  statement,  D,  is  also  a  steamer — a  cargo  boat — 


THE    USE    OF   DIPORT    AND    EXPORT    STATISTICS.  181 

the  actual  value  not  being  stated,  but  apparently  belonging 
to  a  class  which  is  valued  at  £25  per  ton.  Here  the  outlay 
is  £14  13s.  7d.  per  ton,  and  tlie  wages  are  as  much  as 
£2  17s.  Gd.  per  ton. 

E.  Is  another  steamer,  a  plain  cargo  boat,  valued  at  £25 
per  ton,  \\'ith  an  annual  outlay  of  £11  2s.  per  ton,  including 
only  £1  10s.  per  ton  for  wages. 

F.  Is  another  cargo  boat,  value  about  £22  per  ton.  Here 
the  gross  earnings  are  stated,  and  amount  to  about  £17  per 
ton,  nearly  80  per  cent,  of  the  value.  Of  the  £17  per  ton 
earned,  the  outlay  abroad  is  £7  per  ton,  or  between  a  half 
and  a  third. 

G.  Contains  an  account  of  four  steamers  in  the  Mediterra- 
nean trade  valued  at  £15  per  gross  ton,  or  £22  net,  whose 
average  outlay  amounts  to  about  £10  16s.  per  ton  gross, 
equal  to  about  £16  per  ton  net.  The  results  are  in  fact 
much  the  same  as  for  F,  though  tlie  payments  abroad  do  not 
appear  so  large. 

H.  Is  a  record  of  four  steamers  engaged  in  the  coasting 
trade  or  short  voyages.  Their  average  value  is  also  about 
£15  per  gross  ton,  or  £22  per  ton  net,  and  the  average 
outlay  is  about  £10  10s.  per  gross  ton,  or  £15  15s.  per 
net  ton. 

The  next  records,  I,  K,  and  L,  all  relate  to  sailing  ships  : 
I  shows  an  outlay  of  £5^  17s.  per  net  registered  ton  ;  K  an 
outlay  of  £6  Is.  8d. ;  and  L,  which  gives  an  average  of  no 
fewer  than  fifty  vessels  engaged  in  miscellaneous  trades,  an 
average  outlay  of  about  £5  6s.  per  net  registered  ton.  The 
values  in  I  and  K  are  £15  and  £14  respectively,  and  in  L 
about  £9  10s.  per  ton.  In  the  case  of  L  the  statement  is 
accompanied  by  a  private  note,  indicating  that  the  profit  is 
about  £1  IGs.  per  ton,  that  is,  about  one-third  of  the  outlay. 
This  would  make  the  gross  earnings  over  £7  per  ton  ;  and  as 


182 


THE   USE   OF  BIPORT   AND   EXPOET   STATISTICS. 


the    outlay  abroad  is  £1  10s.  j)er  ton,  the  gross  earnings 
receivable  at  home  would  be  about  £5  10s.  per  ton. 

Combining  all  the  information  from  the  various  sources, 
what  it  seems  to  point  to  in  the  case  of  steamers  is  first  a 
gross  outlay,  ranging  from  about  £11  or  £12  up  to  £20  and 
even  more  per  net  registered  ton,  this  gross  outlay  being 
also  about  80  or  90  per  cent,  of  the  income,  which  would 
thus  range  from  about  £15  to  £22  per  ton.  In  no  case, 
apparently,  not  even  that  of  the  lowest  collier,  can  the  gross 
income  be  put  at  less  than  about  £15  per  ton.  The  subjoined 
table  brings  out  this  clearly  : — 


Gross  Income 
where  Stated, 

Outlay  per  Ton. 

Per  Cent,  of 

per  Ion. 

Amount. 

Income. 

£ 

£      s.    d. 

Six  Steamers  in  '  Statist ' 

1^ 

20     -     - 

88 

Statement  B       

■ — . 

21     -     - 

— 

C       

— 

14    3    - 

— 

D      

— 

14  13    7 

— 

E       

— 

11    2    - 

— 

F      

17 

12    -    - 

70 

G      

16    -    - 

H      

— ■ 

15  15    - 

— 

Thu.g,  in  any  case  where  the  income  is  mentioned  at  all, 
even  in  the  case  of  an  ordinary  steamer  spending  no  more 
than  £12  per  ton,  there  is  no  lower  sum  mentioned  than  £17 
per  ton.  Assuming  that  in  all  the  other  cases  the  percentage 
of  expenses  is  also  high,  and  not  less  than  80  per  cent,  of 
the  income,  we  should  have  an  income  in  all,  except  the 
lowest  class,  amounting  to  about  £16  to  £18  per  ton  and 
upwards. 

I  shall  propose  then  to  place  the  earnings  of  our  steam 
fleet    on    home    account,   inclusive   of    the    earnings  from 


THE   FSE   OP   nrPORT   AND   EXPORT   STATISTICS.  183 

passengers,  fit  not  less  tliaii  £15  per  ton,  Nvliic^li  would  allow 
for  expenditure  in  foreign  ports.  This  on  the  tonnage  regis- 
tered at  the  end  of  1880,  viz.,  2,723,000  tons,  would  come  to 
about  41  million  pounds. 

A\'itli  regard  to  the  sailing  vessels,  the  problem  seems  more 
sim[)le.  The  average  earnings  may  be  put  at  not  less  than 
£7  per  ton,  the  outlay  being  £5  Gs.  per  ton.  The  .sum  of  £7 
per  ton  on  a  fleet  of  3,851,000  tons  comes  to  about  27  million 
pounds,  from  which  about  £1  10s.  per  ton,  or  say  G  million 
pounds,  would  fall  to  be  deducted  for  outlay  in  foreign  ports, 
lca\ing  about  21  million  pounds  as  earned  on  home  account. 
The  two  sums  together  amount  to  62  million  pounds,  which 
is  not  far  from  the  sum  of  GO  million  pounds  already  arrived 
at.  A  certain  deduction  would  of  course  have  to  be  made 
from  this  calculation  for  the  earnings  of  the  fleet  engaged 
purely  in  coasting,  but  not  sufficient,  I  think,  to  alter  the 
round  figure  of  60  million  pounds. 

As  a  rough  calculation,  I  would  suggest  that  £5  per  ton 
from  sailing  ships,  and  £15  per  ton  from  steamers,  will  give 
us  an  approximate  figure  for  the  foreign  earnings  of  our 
mercantile  fleet,  making  all  corrections  for  outlays  abroad. 
If  there  is  any  over-estimate,  there  woidd  be  a  set  off"  to 
some  extent  in  the  outlay  on  foreign  vessels  in  our  own 
ports. 

My  own  impression  is  that  the  figure  is  under  and  not 
over  the  mark.  The  above  account  deals  only  with  vessels 
on  the  register  of  the  United  Kingdom,  and  known  to  be 
employed  in  the  foreign  trade.  There  are  many  vessels,  as 
already  huitcd,  on  colonial  registers,  or  which  have  been  lost 
sight  of,  which  are  really  British  owned,  and  which  bring  an 
income  to  British  owners.  We  may  Ije  sure  that  there  are 
considerable  sums  beyond  what  has  been  stated  to  be  brought 
to  account. 


184 


THE    USE    OF   EVIPOKT    AND    EXPORT    STATISTICS. 


It  will  serve  to  make  clear  to  us  what  all  this  trade  means, 
besides  confirming  the  conclusion  as.  to  the  income  derived 
from  it  to  the  United  Kingdom,  if  we  further  inquire  what  the 
share  of  the  gross  earnings  which  comes  to  us  is  composed 
of.  What  are  the  principal  items  ?  The  information  in  the 
Appendices  IV  and  V  bears  a  good  deal  on  this  point,  and 
may  be  confirmed  in  various  ways. 

The  principal  items  are  clearly — wages,  victualling,  insur- 
ance, repairs,  renewals  and  depreciation,  and  profit.  I  have 
to  submit  the  following  table,  deduced  from  the  accounts 
annexed,  always  premising  that  the  figures  show  only  what 
is  earned  for  the  United  Kincjdom : — 


Per  Ton. 

Total  for  Tonnage 

of 
United  Kingdom. 

Sailing  Vessels — 

Wages        

Victualling       

Insurance,  7h  per  cent,  on  mean  value) 

of  £10  per  ton      j 

Eepairs,  renewal,  and  depreciation,  122  [ 

per  cent,  on  mean  value  of  £10  per  ton  j 
Profit,  12i  per  cent 

£      s.    d. 
11- 

-  11     - 

-  15    - 

IS- 
IS- 

Mlns. 
£ 

4 
2 

3 

5 
5 

Total 

—                     19 

Steamers — 
Wages 

Provisions         

Insurance,  7s  per  cent,  on  mean  value) 

of  £25  per  ton      ( 

Eepairs,  renewals,  and  depreciation,  151 

per  cent,  on  mean  value  of  £25  per  ton  j 
Profit,  12i  per  cent 

2  -    - 

1    10    - 

1    17    G 

3  15    - 
3      2    6 

52^ 

42 

5 

lO 

8^ 

Total 

— 

33h 

THE    USE   OF   IMPORT    ANT)   EXPORT   STATISTICS. 
Summary. 


185 


Wages 
Vrovisions 
Insurance 
lioi)air.s,  &c. 
Profit 


S:iilin<;  Vessels.     Steamer 


Mlns. 
£ 


Milns. 

£ 
5i 
•li 
5 
10 
8i 


19  I    33i 

Add  port  expenses  at  home,  including  harbour  and  light) 

dues,  commissions,  &c ) 

„    coals  shipped  iu  steamers  from  United  Kingdom 


Total 


T..t. 


Ml  us. 
£ 

6i 

8 
15 
I3i 


52i 

8i 


63 


Here  again  little  is  included  for  tlie  outlay  on  forei,ii,n 
vessels  in  English  ports,  while  no  deduction  is  made  for  the 
earnings  of  our  fleet  engaged  in  the  coasting  trade.  Making 
all  allowances,  the  figure  of  GO  million  pounds  as  our  foreign 
earnings  in  connection  with  shipping  is  submitted  as  near 
the  mark. 

The  question  arises  whether  the  figures  are  vraisemUallc, 
and  it  is  immediately  suggested  as  regards  wages  that  we 
have  a  check.  The  number  of  persons  employed  in  our 
mercantile  fleet  in  1880,  not  including  masters,  was  193,000. 
Dividing  9^  million  pounds  by  this  sum  we  get  at  an  average 
money  wage  of  £50  per  man.  I  do  not  consider  this  a  very 
liigh  average,  allowing  for  the  fact  that  it  includes  the  pay  of 
masters,  and  officers  of  every  grade,  engineers,  stokers,  and 
others,  all  receiving  more  than  the  ordinary  a.d.  wages,  wluch 
are  not  less  than  £2  10s.  or  £3  per  month.*  The  averages 
for  sailing  vessels  and  steamers  would  work  out  al)0ut  £40 
per  man  for  sailing  vessels,  and  rather  less  than   £70  per 


*  Sco  return,  "  Progress  of  Merchant  Shipping  for  1880." 


186  THE   rSE    OF   niPOKT    AND    EXPORT   STATISTICS. 

man  for  steamers,  wliicli  of  course  include  a  much  larger 
proportion  of  highly  skilled  labour.* 

With  recjard  to  victuallin<T  I  think  I  need  do  no  more 
than  refer  you  to  the  paper  of  Mr.  Bourne,  already  cited,  in 
■which  he  gives  the  estimate  of  6  million  pounds  for  \dctual- 
ling  and  stores  for  the  year  1879 — that  is,  ^dctualling  and 
stores  put  on  board  ships  from  the  United  Kingdom.  As  I 
understand  Mr.  Bourne's  mode  of  doing  the  sum,  this  would 
include  \'ictuals  and  stores  put  on  board  foreign  ships  also, 
"whereas  tliis  item  in  the  above  account  only  includes  British 
ships  ;  but  the  item  in  any  case  is  not  a  large  one. 

The  other  items  of  insurance,  repairs,  renewals  and  depre- 
ciation, and  profit  require  less  remark.  They  amount  alto- 
gether to  35  per  cent,  on  the  value  of  our  shipping,  which  I 
assume  to  be  about  40  million  pounds  for  sailing  vessels, 
and  about  70  million  pounds  for  steamers,  in  the  year  1880. 
With  regard  to  insurance,  however,  it  may  be  pointed  out 
that  the  annual  replacements  required  by  wrecks  to  vessels 
of  the  United  Kingdom— I    speak  of    total  losses    only — 

amount  to  about 

150,000  tons,  sailing  vessels 
230,000    „     steamers 

380,000    „      total 

annually.  The  cost  of  building  these  vessels,  at  £15  per  ton 
for  sailing  vessels,  and  £30  per  ton  for  steamers,  would  l)e 
about  9  million  pounds,  or  more  than  the  8  millions  put 


*  It  will  obviously  be  sn.apested  that  two  deductions  should  be 
made,  one  for  the  wages  of  tlie  fleet  engaged  in  coasting,  the  other  for 
wages  paid  abroad ;  but  the  deductions  on  these  heads  would,  I  believe, 
be  immaterial,  while  I  have  sought  to  allow  for  minor  corrections  like 
these  by  the  moderation  of  the  estimates.  In  1881,  wages  generally 
advanced  above  the  figures  here  dealt  with  about  £6  per  head,  or 
nearly  £1,500,000  in  all. 


THE   USE   OF   IJIPOKT   AND    EXPOKT   STATISTICS.  1S7 

down  for  insurance.  I  am  inclined  to  think  that  this 
estimate  in  particuhir  is  under  the  mark,  hut  I  leave  the 
figure  as  it  stands,  in  case  it  should  be  thought  by  some  that 
there  is  an  over-estimate  for  repairs  and  depreciation.  This 
last  is  a  high  estimate,  tliough  I  consider  it  fully  justified  1»y 
the  figures  before  mo,  shipping  property  ageing  rapidly. 
With  regard  to  the  profit,  in  putting  it  at  12^  per  cent.,  I 
have  kept  a  good  deal  l)elow  what  more  than  one  ship-owner 
OAvns  to,  but  the  rate  is  undoubtedly  a  good  deal  more  than 
that  paid  by  the  high-class  steam  shipping  companies  whose 
accounts  are  published.  There  is  reason  to  believe,  however, 
that  the  latter  are  among  the  least  remunerative  of  vessels. 
With  regard  to  port  expenses  at  home,  the  broad  facts  are 
that  harbour,  pilotage,  and  light  dues  alone  would  account 
for  nearly  three-fourths  of  the  amount  here  stated,  and  only 
a  small  part  would  fall  on  the  coasting  fleet.  The  final  item 
of  coal  put  on  board  steamers  at  home  is  rendered  necessary 
in  this  calculation  by  the  exclusion  from  the  other  items  of 
any  payments  abroad,  which  are  included  in  the  general 
accounts  above  dealt  with.* 

There  is  a  concurrence  of  testimony,  tlierefore,  to  the  effect 
that  an  enormous  sum  accrues  annually  to  the  United  King- 
dom in  connection  with  its  shipping  business,  and  that  the 
sum  of  60  million  pounds  is  not  far  from  the  mark.  First, 
in  examining  the  imports  and  exports  of  the  whole  world,  we 
find  a  difference  bet\\-een  them  which  must  represent  the 
cost  of  conveyance,  and  analysing  and  dividing  this  amount 


*  There  ought  to  be  some  furtlicr  correction,  perhaps,  as  regards 
the  latter  figiares  in  respect  of  the  earnings  of  our  mercantile  fleet 
engaged  in  the  coasting  trade,  already  referred  to,  hut  that  portion,  as 
already  stated,  is  comparatively  small,  while  these  last  calculations  do 
not  include  anything  for  the  earnings  or  profit  of  Briti.sh  owned  ships 
not  on  the  register  of  the  United  Kingdom. 


188  THE   USE   OF   BIPORT   AND   EXPORT   STATISTICS. 

among  tlie  principal  ship-owning  nations,  we  get  a  figure  of 
about  60  million  pounds  as  due  annually  to  the  United 
Kingdom  for  freight  alone.  Second,  according  to  various 
testimonies — ^Mr.  Bourne,  Mr.  Newmarch,  Mr.  McKay  and 
others — there  is  known  to  be  a  large  sum  annually  accruing 
in  connection  with  the  direct  trade  of  the  United  Kingdom 
alone,  a  sum  of  40  to  50  millions  sterling,  and  this  sum, 
making  due  allowance  for  what  comes  to  us  from  the  shipping 
in  the  indirect  trade,  again  points  to  the  probability  of  a 
large  sum  being  due  to  us  which  cannot  be  less  than  about 
60  million  pounds.  Third,  the  direct  evidence  of  the  accounts 
of  numerous  steamers  and  sailing  ships  points  to  a  gross 
earning  of  this  amount,  if  not  more,  deducting  all  outlays 
abroad.  Last  of  all,  there  is  additional  confirmation  in  the 
analysis  of  the  different  items  of  the  expenses  of  our  fleet, 
and  the  comparison  of  these  items  with  other  sources  of  in- 
formation, such  as,  for  wages — the  number  of  men  employed, 
for  victualling  and  stores — the  independent  inquiry  of  Mr. 
Bourne,  for  insurance — the  sums  actually  spent  in  replacing 
wrecks,  for  profit — the  actual  admissions  of  ship-owners 
themselves,  and  the  accounts  of  leading  companies,  and  for 
such  items  as  port  expenses — the  amounts  actually  paid  for 
harbour  and  light  dues.  I  must  again  rejieat,  however,  my 
impression  that  probably  a  much  larger  sum  is  really  due  to 
us,  in  consequence  both  of  the  moderation  of  the  estimates 
and  the  circumstance  of  a  large  number  of  vessels  not  on 
the  register  of  the  United  Kingdom  being  in  fact  owned  in 
the  United  Kingdom.  It  is  not  necessary,  however,  for  the 
special  purpose  of  this  paper  to  name  an  exact  figure.  I 
shall  be  content  if  I  have  made  clear  that  the  business  of 
ship-owning  is  really  enormous,  and  that  if  we  would  make  any 
use  at  all  of  the  import  and  export  figures  in  the  question  of 
the  balance  of  trade,  we  must  dwell  on  the  invisible  export 


THE    USE    OF    nrrORT    AN'D    EXPORT    STATISTICS.  189 

which  takes  place  by  means  of  oiu-  shippinj^-.  Tlic  discussion 
on  the  subject  ought  to  include  a  formal  treatment  of  the 
question  of  liow  much  our  shipping  earns. 

The  in([uiiy  does  not  end  here.     I  have  already  drawn 

attention  to  the  point  that  tlie  shi])-o\vnL'r  is  not  the  only 

the  person  concerned  in  the  cost  of  conveyance,  of  which 

aggregate  excess  of  imports  in  the  imports  and  exports  of 

the  world  is  composed.      There  are  other  commissions  and 

charges,  of  which  I  have  suggested  that  the  English  share 

amounts  at  least  to  W  million  pounds — perhaps  20  million 

pounds  would  be  nearer  the  mark.     The  latter  sum  is  only 

2;^  per  cent,  on  the  total  of  our  imports  and  exports — about 

800  million  pounds;  and  when  I  point  out  that  insurance 

cannot  be  estimated  at  less  than  15s.  per  cent.,  and  bankers' 

commission,  bill  stamps,  and   minor  charges  5s.  per  cent., 

leaving  only  1^  per  cent,  for  all  other  charges,  the  estimate 

must  V)e  hold  to  be  moderate.     Mr.  McKay,  in  the  letter 

already    referred    to,   makes    the    commission   and   charges 

amount  to  more  than  double  this  sum,  and  quotes  the  case  ot 

a  Manchester  shipment,  in  which  the  insurance  and  other 

charges  came  to  4  per  cent.     I  confess  I  am  afraid  of  too  big 

figures,  and  have  tried  to  keep  well  within  the  mark.     The 

sum  of  20  million  pounds,  added  to  the  GO  million  pounds 

due  to  us  for  freight,  makes  a  total  of  80  million  pounds, 

wliich  is  really,  to  use  a  phrase  which  I  have  tried  to  make 

familiar,  an    invisible    exp(jrt.      In   using  the  import   and 

export  statistics  for  the  question  of  the  balance  of  trade,  we 

have  to  credit  ourselves,  in  addition  to  our  recorded  exports, 

with  a  sum  of  at  least  this  amount. 

Such  figures,  if  accepted,  without  any  further  correction 
for  interest  receivable  for  investments  abroad,  would  serve  of 
themselves  to  revolutionise  the  conception  of  the  international 
balance  between  this  country  and  other  nations,  which  would 


190  THE   USE   OF  IMPOKT   AND   EXPOBT   STATISTICS. 

be  suggested  by  the  bare  consideration  of  the  import  and 
export  figures.  In  the  last  few  years  the  excess  of  imports, 
as  we  have  seen,  has  been  about  120  million  pounds  (see 
sttpra,  p.  169),  but  a  deduction  from  this  sum  of  80  million 
pounds  would  reduce  the  amount  to  40  million  pounds,  with- 
out any  correction  whatever  for  other  international  trans- 
actions, such  as  the  receipt  of  interest  upon  our  foreign 
investments.  Even  apart  from  such  a  correction,  then, 
the  excess  of  imports  is  almost  accounted  for.  A  nominal 
difference  of  about  40  million  pounds,  subject  to  the  qualifi- 
cations already  stated,  is  practically  much  the  same  thing  as 
no  difference  at  all.  As  we  have  seen,  we  cannot  be  sure  to 
within  15  or  20  million  pounds  of  the  totals  of  our  imports 
and  exports  and  the  balance  sho%vn  by  them,  while  there  is 
also  a  very  great  probability  that  the  sum  of  80  million 
pounds,  wliich  I  have  assumed  to  be  annually  earned  by  the 
country  in  connection  with  its  shipping,  and  other  charges  in 
connection  with  the  conveyance  of  goods  from  country  to 
country,  is  a  good  deal  under  the  mark.  When  we  establish, 
therefore,  that  40  million  pounds  is  a  maximum  sum  for  the 
apparent  excess  of  imports,  we  establish  that  there  is  nothing 
in  such  a  figure  by  itself  to  give  us  any  concern  about  the 
nation  living  on  its  capital.  An  excess  of  that  amount  might 
easily  be  balanced  by  an  excess  in  the  opposite  direction  in 
other  years ;  we  must  expect  so  great  a  trade  as  that  of  the 
United  Kingdom  to  exhibit  oscilkitions  of  this  magnitude. 
If  it  is  to  be  proved  that  the  nation  is  living  on  its  capital  to 
any  extent  at  all,  it  must  be  shown  aliunde,  from  the  opera- 
tions of  the  stock  exchanges  and  otherwise,  that  the  nation 
is  borrowing  abroad,  or  is  bringing  home  its  capital. 

The  figures  suggest  another  correction  of  the  first  impres- 
sion of  the  import  and  export  figures.  The  excess  of  imports 
being  itself  no  novelty,  and  the  only  thing  new  being  the 


THE  USE  OF  IMPORT   AND   EXPORT   STATISTICS. 


101 


sudden  increase  in  recent  years,  the  ([uestion  is  naturally 
suggested  whether  there  is  any  change  in  the  invisible  items 
of  our  export  which  would  help  to  account  for  such  an 
increase.  On  this  head  I  need  hardly  say  that  nothing  has 
been  more  remarkable  during  the  last  twenty  years  than  the 
wonderful  progress  of  our  shipping,  both  in  absolute  amount 
and  in  relation  to  the  rest  of  the  world.  The  figures  as  to 
the  United  Kinsirdom  are  : — 


Tonnage  of  Sailing  and  Steam  Vessels  belonging  to  the  United  Kingdom. 
[In  thousands  of  tons.] 


tjteam. 

Sailing. 

Total  in 
Sailing  Tons. 

Increase  Per 

Amount. 

Equivalent  in 

Cent,  in  Five 
Periods. 

Sailing  Ions. 

Tons. 

1840 

2,637 

87 

348 

2,985 

— 

'50 

3,336 

168 

672 

4,008 

30 

'60 

4,134 

452 

1,808 

5,942 

50 

70 

4,506 

1,111 

4,444 

8,950 

50 

'SO 

3.799 

2,720 

10,880 

14,679 

64 

The  business  is  thus  a  rapidly  increasing  one.  Twenty 
years  ago  the  mercantile  fleet  of  the  United  Kingdom  was 
capable  of  performing  the  work  of  about  two-fifths  only  of 
the  present  mercantile  fleet.  Assuming  the  earnings  to  be 
in  much  the  same  proportion,  the  sum  accruing  to  the  United 
Kingdom  in  connection  with  its  shipping  would  be  about  27 
million  pounds  only  twenty  years  ago,  as  compared  with  00 
million  pounds  now.  Even  as  compared  with  a  period  ten 
years  ago,  since  which  our  mercantile  fleet  has  increased  05 
per  cent.,  such  an  increase  would  imply  that  the  earnings 
ten  years  ago  were  only  about  00  million  pounds,  as  com- 
pared with  00  million  pounds  now,  a  ilillerence  of  -5  million 
pounds,  by  wliicli  our  invisible  exports,  in  couucctiou  with 


192  THE    rSEOF   IMPORT    AND    EXPORT    STATISTICS. 

the  shipping  alone,  have  increased  in  the  ten  years.  Not 
only  then  is  the  excess  of  imports  no  new  fact,  but  the 
increase  of  it  in  recent  years  is  obviously  to  be  largely 
accounted  for  by  the  increase  of  our  shipping  business.* 

The  increase  of  our  shipping  has  been  going  on  quite 
steadily  all  through  the  recent  years  of  depression.  You  had 
the  figures  before  you  at  your  last  meeting  in  Mr.  Glover's 
very  able  paper ;  but  for  convenience  of  reference  I  have 
included  in  the  Appendix  (No.  VI)  a  statement  of  the  pro- 
gress of  our  mercantile  fleet  in  each  year  since  1854,  from 
which  date  we  are  able  to  compare  it  with  the  excess  of 
imports,  adding  a  note  of  the  estimated  earnings  for  the 
United  Kingdom  on  the  basis  already  established.  Tliis 
shows  a  progressive  increase  from  about  24  million  pounds 
in  1854  to  over  60  million  pounds  at  the  present  time.  It 
will  be  said  perhaps  that  rates  of  freight  have  been  diminish- 
ing, which  is  perhaps  true  to  a  certain  extent ;  but  such  a 
reduction  is  allowed  for  in  the  mode  of  calculation  adopted, 
the  earning  power  of  steamers  being  stated  at  three  times 
only  that  of  sailing  ships,  whereas  their  effectiveness  is  as  4 
to  1.  The  reduction  of  freights  cannot  have  been  very  great 
all  round,  though  it  may  be  large  on  some  descriptions  of 
cargo.  The  expenses,  owing  to  the  rise  of  wages,  notwith- 
standing the  great  economy  of  iron  as  compared  with  wood, 
and  the  economy  of  labour  by  means  of  large  vessels  and  the 
substitution  of  steam  for  sailing,  still  remain  very  large, 
both  per  ton  per  annum  and  per  voyage. 

The  other  charges  for  conveyance  accruing  to  a  country 
like  the  United  Kingdom  must  also  have  increased  greatly 

*  See  also  on  this  head  Appendix  X,  ah-eady  referred  to,  showing 
the  great  increase  in  recent  years  of  weiglits  carried  in  the  direct 
foreign  trade  of  the  United  Kingdom,  where  weights  are  stated  or  can 
be  calculated. 


THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS. 


1!):^ 


(luring  the  last  twenty  years.  The  cliarge  of  2J^  per  cent,  on 
the  foreign  trade  of  twenty  years  ago  would  have  been  under 
10  million  pounds,  as  compared  with  20  million  pounds  now. 
These  corrections  M'ill  best  be  sliown  in  a  short  table,  fur 
■which  I  have  made  use  of  the  figures  in  Table  III.,  already 
summarised  (see  supra,  p.  100)  : — 

Excess  of  Imports  as  shown  in  Appendix  III.,  and  Snmmariscd  above 
(supra,  p.  169)  Corrected  by  Deducting  (1)  the  Charges  for  Cross 
Earnings  of  Shipping  as  shown  in  Appendix  VI. ;  and  (2)  the  cliarge 
of'lh  -per  Cent,  for  Commissions,  Insurance,  &c.,  on  the  Total  Amount 
of  the  Direct  Trade  of  the  United  Kingdom. 

[In  millions  of  pounds.] 


Charges 

to  be  Deducted. 

Total  Im- 

Apparent 

Corrected 

ports  and 

Excess  of 

Commission, 

Excess. 

Exports. 

Imports. 

Freight,  &c. 

Insurance, 
kc. 

Total. 

£ 

t: 

£ 

£ 

£ 

£ 

1854-56 

330 

37 

25 

8 

32 

5 

'57-59 

386 

31 

27 

10 

37 

(-)6 

'60-62 

432 

53 

28 

11 

39 

14 

'63-65 

523 

60 

34 

13 

47 

13 

'66-68 

566 

67 

37 

14 

51 

16 

'69-71 

617 

61 

39 

15 

54 

7 

72-74 

732 

61 

46 

18 

64 

(-)3 

'75-77 

713 

121 

51 

18 

69 

52 

'78-80 

690 

119 

58 

17 

75 

44 

This  table  needs  no  comment.  The  figures  are  not  pre- 
sented as  exact,  but  they  show  approximately  the  difference 
between  the  real  and  the  apparent  excess,  and  one  of  the 
reasons  for  the  apparent  excess  increasing  in  recent  yeai-s. 
There  remains,  of  course,  the  more  general  i^uestion  of  the 
balance  of  indebtedness  between  nations,  all  the  points  yet 
dealt  with,  the  imports  and  exports  themselves,  and  the  sum 
accruing  to  the  United  Kingdom  for  the  gross  earnings  of  its 
mercantile  licet  and  for  other  charges  of  conveyance  being 

II.  o 


19-4  THE   USE    OF    IMPORT    AND    EXPORT    STATISTICS. 

only  items  in  a  more  general  account.  On  this  head,  how- 
ever, I  may  be  permitted  not  to  enlarge.  It  is  notorious  that 
a  large  sum  is  due  to  this  country  annually  for  its  invest- 
ments abroad  ;  we  belong,  as  has  been  seen,  to  a  geographical 
group  which  has  probably  such  interest  to  receive.  The 
usual  estimate  has  been  about  50  million  pounds  to  60 
million  pounds  a  year ;  but  since  these  estimates  were  made 
our  investments  abroad  have  increased  enormously,  the 
public  issues  on  foreign  account  of  the  last  six  years  alone, 
i.e.,  since  the  foreign  loan  collapse  of  1875  on  the  London 
Stock  Exchange,  having  been  about  210  million  pounds,  this 
figure  not  including,  moreover,  some  very  large  issues,  in 
which  the  London  Stock  Exchange  was  interested,  but  where 
the  issue  was  abroad.  (See  Appendix  VII.)  I  am  disposed 
to  think  also,  from  a  consideration  of  the  enormous  invest- 
ment of  capital  in  the  movement  of  goods  in  our  ships,  and 
in  the  conduct  of  our  trade  in  foreign  countries  themselves, 
that  this  private  capital  has  never  been  sufficiently  estimated,! 
and  that  our  investments  of  capital  abroad  at  the  present 
time  are  not  less  than  1500  million  pounds  sterling,  on  which] 
interest  at  only  5  per  cent,  would  be  75  million  pounds  pei 
annum,  at  6  per  cent.  90  million  poimds  per  annum,  and  at 
7  per  cent.  105  million  pounds  per  annum.  Whatever  sum 
we  take,  looking  at  the  small  magnitude  of  the  excess  of 
imx^orts  which  remams  after  proper  corrections  for  the 
charges  of  the  cost  of  conveyance,  there  can  be  no  question 
that  in  recent  years,  large  as  the  apparent  excess  of  imports 
has  been,  this  country  has  been  continuing  to  invest  capital 
abroad — from  40  million  pounds  to  60  million  pounds  per 
annum,  if  not  more.  But  for  this  lending,  the  excess  of 
imports  would  have  been  still  greater  than  it  has  been. 

I  do  not  propose  to  go  farther  into  this  question  of  the 
balance  of  indebtedness  in  its  international  transactions  for 


THE   USE   OF   IMPORT   AND   EXPORT   STATISTICS.  195 

the  United  Kingdom.  To  complete  it  would  require  an 
elaborate  investigation  of  the  magnitude  of  private  invest- 
ments, while  such  points  as  the  expenditure  of  British 
citizens  abroad,  and  tlic  expenditure  by  foreigners  in  this 
coiintry,  and  the  minor  movements  of  international  capital 
in  connection  with  exchange  operations,  would  all  require  to 
be  considered.  To  treat  this  subject  properly  would  require 
a  paper  by  itself  almost  as  long  as  the  one  now  Ijcfore  you, 
wliich  is  already  of  ample  dimensions.  I  shall  be  quite 
content  if  I  have  established  to  your  satisfaction  (1)  that  the 
question  to  be  investigated  is  not  that  of  the  diminution,  but 
of  the  increase,  of  our  investments  abroad — that  there  is 
really  no  question  at  all  of  the  nation  bringing  home  capital  or 
living  on  its  capital  in  recent  years ;  and  (2)  that,  whatever 
may  be  our  conclusion  on  this  point,  the  import  and  export 
figures  themselves  are  only  a  small  part  of  the  question,  and 
that  the  use  of  these  figures  by  some  writers  as  if  they  were 
the  whole,  is  only  to  be  excused,  if  it  is  excusable,  on  the 
score  of  ignorance  of  the  nature  of  statistics  and  the  necessary 
conditions  of  dealing  with  them. 


v.— SUBJECT  CONTINUED:  THE  EXCESS  OF  IM- 
PORTS  OR  EXPORTS  IN  FRANCE  AND  THE 
UNITED  STATES.     CONCLUSION. 

Mutatis  mutandlii,  all  these  points  have  to  be  considered  of 
course  in  dealing  with  foreign  nations.  I  shall  only  consider 
two,  the  United  States  and  France.  The  United  States  is 
the  country  which  has  perhaps  the  largest  excess  of  exjiorts. 
In  the  last  six  years,  including  bullion,  that  excess  has  been 
37  million  pounds  annually.  (See  Appendix  VIII.)  The 
•  United  States  is  practically  a  country  whose  exports,  apart 

o  2 


196  THE   USE   OF   IMPOET   AND    EXPORT   STATISTICS. 

from  the  question  of  interest  on  borrowed  money,  ought  to 
balance  its  imports,  its  foreign  shipping  being  quite  insignifi- 
cant, earning  for  it  probably,  according  to  the  above  calcula- 
tion of  £5  per  ton  for  sailing  ships,  about  6  million  pounds  a 
year  only.  How  then  is  the  excess  of  exports  to  be  accounted 
for  ?  What  economic  circumstances  or  conditions  does  it 
imply  ?  I  have  to  suggest  two  tilings :  (1)  the  expenditure 
by  United  States  citizens  travelling  abroad  less  the  expendi- 
ture of  foreigners  travelling  in  the  United  States;  (2)  the 
interest  payable  to  foreigners  on  account  of  foreign  capital 
invested  in  the  United  States.  The  former  cannot  be  less,  I 
believe,  than  10  million  to  15  million  pounds,  the  annual 
migration  of  Americans  to  Europe  being  20,000  to  30,000  in 
addition  to  an  American  colony  of  several  thousands  almost 
constantly  resident  in  Europe,  and  the  latter  cannot  be  less 
than  30  million  pounds ;  total  40  million  pounds.  Even  if 
the  latter  ought  to  be  a  smaller  figure,  we  should  still  have 
to  consider  the  margin  of  error  in  the  United  States  figures, 
especially  those  for  the  imports,  on  account  of  the  under- 
valuations and  smuggling,  so  that  the  apparent  excess  of 
exports  would  be  more  than  the  real  excess,  because  of  the 
imports  being  undervalued.  There  is  certainly  nothing  in 
the  excess  of  exports  to  indicate  unusual  prosperity,  whether 
present  or  prospective.  The  recent  increase  of  the  exports, 
and  of  the  excess  of  exports,  is  also  to  be  accounted  for  by  i 
the  fact  that  in  the  last  tw^enty  years  American  foreign 
shipping  has  been  diminishing  in  proportion  to  its  total 
trade.  That  trade  twenty  years  ago  was  135  million  pounds 
only,  the  tonnage  of  American  shipping  in  the  foreign  trade 
being  over  2^  million  tons,  which,  at  the  rate  of  £5  per  ton, 
would  entitle  it  to  a  gross  income  of  12^  million  pounds  a 
year.  Now  the  trade  is  347  million  pounds,  and  the  earn- 
ings from  the  shipping  must  be  about  6  million  pounds  only. 


THE    USE    OF   IMrOKT    AND    EXPORT    STATISTICS. 


197 


There  is  ample  reason,  therefore,  fur  the  excess  of  imports  in 
the  American  trade  ceasing,  and  an  excess  of  exports  begin- 
ning, apart  from  the  farther  ol  )vioiis  exphmation  that  America 
borrowed  Lirge  snms  abroad  during  the  civil  war  and  after- 
wards, the  interest  of  which  has  now  to  be  paid.  It  seems 
a  nice  question  whether  America  of  late  years  has  been 
reducing  its  indebtedness  abroad,  but  there  is  nothing,  at 
least  in  the  import  and  export  figures,  corrected  as  they 
ought  to  be,  to  indicate  such  a  reduction.  I  am  only  con- 
cerned, however,  at  present,  with  pointing  out  the  nature  of 
tlie  inquiry  which  must  be  made.* 

As  regards  France,  the  account  stands  as  follows  for  the 
last  twenty  years  (see  Appendix  IX.) : — 

[In  thousanils  of  imunds.] 


Excess  of 

Excess  of 

Imports. 

Exports. 

Imports. 

Exports. 

£ 

£ 

£ 

£ 

1860     .. 

13 

'71     .. 

19 

.. 

'61     .. 

U 

'72     .. 

8 

'62     .. 

3 

'78     .. 

7 

'63     ,. 

,  , 

14 

'74     .. 

20i 

'64     .. 

17 

'75     .. 

I2i 

'65     .. 

15 

76     .. 

40^ 

'66     .. 

i"5 

77     .. 

29^ 

'67     .. 

27 

'78     .. 

53" 

'68     .. 

34 

., 

T.)     .. 

48 

'69     .. 

15 

.. 

'8U     .. 

53 

'70     .. 

7i 

•  See  also  the  previous  Essay  on  the  Foreign  Trade  of  the  United 
States.  I  may  add  too  a  fact,  of  which  I  was  not  aware  when  I  wroto 
this  paper,  tliat  the  sy.stem  in  America  is  to  value  the  imports  not  at 
the  port  of  arrival,  l.ut  as  at  the  place  from  which  the  goods  were  sent. 
The  value  in  America  therefore  does  not  include  the  cost  of  convey- 
ance, and  the  ]<roportion  of  the  exports  is  accordingly  hightr  than  it 
would  otherwise  l)c  as  compared  with  a  country  like  England,  whcro 
tjie  value  of  the  imports  does  include  the  cost  of  conveyance. 


198  THE   rSE   OF   rvIPOET  AND   EXPORT   STATISTICS. 

Here  the  excess  of  imports  is  less  marked  than  it  is  in  the 
case  of  the  United  Kingdom,  and  there  has  been  a  smaller 
increase  in  the  excess  in  recent  years  compared  with  six  or 
seven  years  ago.  The  explanation,  no  doubt,  is  that  French 
shipping  is  comparatively  small,  being  932,000  tons,  and  has 
increased  very  little  in  recent  years,  the  only  change  being 
that  since  1860  abont  200,000  tons  of  steam  shipping  have 
been  substituted  for  as  many  tons  sailing,  the  total  rather 
diminishing.  The  total  gross  earnings  for  France,  at  the 
same  rate  as  for  England,  can  only  be  about  6  million  pounds, 
and  the  increase  in  twenty  years  little  over  2  million  pounds. 
At  the  same  time,  leaving  out  our  shipping,  the  excess  is  as 
great  in  proportion  for  France  as  for  the  United  Kingdom. 
There  can  be  little  question  that  France  has  increased  its 
investments  abroad,  notwithstanding  the  payment  of  the 
indemnity,  while  it  must  derive  a  large  income  annually 
from  the  expenditure  of  foreigners  travelling  or  residing  in 
France,  French  citizens  by  comparison  going  very  little 
abroad.  It  would  be  interesting  for  France  as  for  England 
to  trace  the  growth  of  its  foreign  investments  in  recent  years, 
but  the  problem  of  stating  its  balance  is  neither  so  large  as 
that  for  England  nor  so  complicated  in  various  ways.  The 
figures,  however,  when  rightly  considered,  are  in  apparent 
accordance  vnth.  tlie  economic  circumstances  of  the  country, 
while  they  teach  nothing  as  to  comparative  prosperity  or  the 
reverse. 

The  broad  conclusion  is  that  the  importance  attached  in 
some  of  the  recent  discussions  to  the  excess  of  imports  in  any 
country,  and  to  the  increase  of  that  excess  in  this  country  in 
recent  years,  and  contrariwise  to  the  excess  of  exports  in  the 
case  of  other  countries,  and  to  the  increase  of  that  excess,  is 
wholly  mistaken.  There  is  nothing  in  the  facts  either  way 
to  indicate  special  circumstances  of  prosperity  or  adversity, 


I 


THE    USE    OF    IMPORT    AND    EXl'OUT    STATISTICS.  100 

or  that  Olio  nation  is  living  on  its  foreign  capital,  and  another 
increasing  its  foreign  cajiital  or  diminishing  its  indebtedness 
abroad.  The  facts  ■when  investigated  throw  a  great  deal  of 
light  on  the  industrial  circumstances  of  different  countries, 
but  until  investigated  and  compared  with  other  facts  they 
are  entirely  without  meaning.  In  other  words,  import  and 
exjjort  figures  require  delicate  and  careful  handling  for  any 
such  inquiry  as  the  account  of  intlebtedness  between  nations. 
Quod  crat  demonstrandum. 


VL—IMrOBT  AND  FXFOBT  STATISTICS  AND  THE 
rnOTECTIONIST  CONTRO  VERSY. 

The  second  special  inquiry  I  have  proposed  is  the  way  to 
use  import  and  export  figures  in  the  controversy  between 
free  traders  and  protectionists.  How  do  the  statistics 
assist  ? 

In  answering  this  question,  we  must  be  struck  by  the  fact 
that  there  can  hardly  Ijc  any  statistics  available  to  settle 
directly  the  cardinal  question  between  free  trade  and  protec- 
tion, viz.,  which  n'r/ime  favours  most  the  general  prosperity 
of  a  people,  morally  as  well  as  materially.  No  such  question 
can  be  treated  practically  from  a  material  point  of  view 
alone ;  political  and  moral  considerations  must  come  in.  I 
could  (juitc  understand  a  free  trader  admitting  a  protectionist 
system  to  be  the  best  materially,  and  a  protectionist  admitting 
the  free  trade  system  to  be  the  best  materially,  and  yet  each 
on  moral  and  political  grounds  preferring  the  less  advan- 
tageous system  in  a  material  view,  liutliow  dilhcult  to  trace 
■out  all  llie  effects  of  an  economic  reij'uac  in  the  moral  and 


200  THE    USE    OF   IJIPOET    AND    EXPORT    STATISTICS. 

political  sphere  !  Even  materially,  however,  there  can  hardly 
Le  adequate  statistics.  To  make  any  statistical  comparison 
at  all  possible  between  different  regimes,  it  would  be  necessary 
either  to  find  two  countries  practically  alike  in  their  economic 
and  industrial  circumstances,  and  in  the  character  of  tlieir 
people,  subject  them  to  the  opposite  regimes,  and  then 
ascertain  and  compare  their  relative  material  progress ;  or  to 
find  a  particular  country  subjected  at  different  periods  to  the 
two  opposite  regimes  without  any  other  differences,  and  then, 
compare  the  different  results,  if  any  such  are  appreciable. 
Experience  does  not  supply  us  with  such  cases.  No  two 
communities  are  sufficiently  alike  to  be  comparable  in  strict 
logic.  The  slightest  differences  in  the  race  or  moral  condi- 
tion of  the  two  communities  which  are  to  outward  appearance 
much  the  same,  might  make  a  great  deal  of  difference  in  their 
material  progress.  If  the  two  are  subjected  to  different 
economic  regimes,  how  are  we  to  tell  whether  the  inferior 
progi-ess  of  the  one  materially — even  wlien  we  are  sure  about 
the  inferiority — is  due  to  the  regime,  and  not  to  other  differ- 
ences in  the  character  of  the  communities,  which  we  cannot 
so  well  appreciate  ?  The  same  with  a  conmiunity  at  different 
periods  of  its  own  history.  How  can  we  tell  that  there  is  no 
moral  difference  of  a  serious  kind  to  affect  the  economic 
progress  of  the  community  between  one  period  and  another  ? 
External  economic  circumstances  are,  besides,  incessantly 
changing,  and  may  affect  two  communities  apparently  of 
much  the  same  character  and  position  quite  differently.  If 
it  were  possible  to  institute  many  pairs  of  comparisons  and 
exhibit  a  uniform  result  in  all,  it  might  be  safe  to  infer  that 
it  was  the  regime  which  did  make  the  difference,  no  other 
uniform  cause  of  difference  being  assignable  ;  but  this  condi- 
tion of  course  it  is  impossible  to  fulfil. 

Quite  lately  an  interesting  attempt  has  been  made  by  Mr. 


I 
I 


THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS.  201 

Ea(k'U-l*i)well,*  to  sliow  that  the  ri'i/inir  does  make  all  the 
(litlerence  in  the  case  of  two  comiuuuities  Nvliich  he  compares 
— New  South  Wales  and  Victoria,  tlie  former  free  trading  and 
the  latter  protectionist ;  but  directly,  I  fear,  the  comparison 
proves  nothing.    In  strict  logic  one  comparison  is  not  enougli. 
There   must   he   many   comparisons.     It   may  be   doubted, 
moreover,  as  regards  this  particular  case,  whether  the  two 
communities  compared  were  really  in  sufficiently  like  cir- 
cumstances   at    starting    to    make    the    comparison   really 
valuable ;  while  it  is  not  sliown  that  no  o'ther  circumstances 
besides  the  economic  ones  may  have  helped  to  make  the 
difterence  since ;  nor  is  it  shown  that  the  difference  of  the 
regime  itself  was  so  great  as  to  justify  us  in  calling  the  one 
colony  free  trading  and  the  other  protectionist.    But  granting 
the  apparent  likeness  of  the  two  cases  in  all  except  the  one 
point,  what  I  have  to  urge  is  that  one  comparison  proves 
nothing  in  strict  logic,  and  at  best  does  no  more  than  raise 
a    presumption    to    be    confirmed    or    set   aside  by  farther 
inquiry. 

There  would  be  a  farther  difficulty  in  making  such  an 
inquiry  statistically,  in  the  facility  with  which  the  visible 
consequences  of  an  inferior  regime  may  be  masked  by  an 
increase  of  industry  on  tlie  part  of  the  suffering  community 
to  make  u[)  the  luss.  The  connuunity,  rather  tlian  lose  in 
the  return  to  its  labour,  might  labour  more  energetically,  and 
so  the  outward  result  would  be  as  before — the  production, 
consumption,  and  saving  might  remain  wliat  they  M'cre.  It 
is  even  conceival)le  that  the  community  suffering  most  might 
apparently  gain,  in  consequence  of  a  greater  develnpment  of 
industry  and  energy  than  what  is  absolutely  necessary  to 
supply  the  loss.     In  any  case,  I  am  quite  ready  to  believe 

♦  'Fortnightly  Review,'  IMaroli,  1882. 


202 


THE    USE    OF    DIPORT    AND   EXPORT   STATISTICS. 


tliat  the  visible  dift'erence,  as  between  free  trade  and  pro- 
tection, if  the  protection  is  not  extreme,  may  often  not  be  so 
great  as  to  be  traceable  by  statistics.  Suppose  the  protected 
industries  in  a  country  giving  protection  to  be  one-tenth  of 
the  whole,  or  the  industries  which  might  be  protected  in  a 
free  trading  community,  but  which  are  left  free,  to  be  also 
one-tenth,  which  is  a  large  proportion,  and  that  the  loss 
arising  to  the  community  by  the  diversion  of  capital  and 
labour  from  more  profitable  to  less  profitable  employments  is 
10  per  cent,  on  the  production  of  this  one-tenth  of  the  people  ; 
then  the  loss  to  the  whole  community — the  difference  it 
makes — is  only  1  per  cent,  of  the  total  production.  Even  if 
the  diversion  should  cause  a  waste  of  25  per  cent,  in  the 
protected  industries  in  the  one  case,  and  the  unprotected 
industries  in  the  other  case,  the  difference  to  the  whole  com- 
munity would  still  be  only  2^  per  cent.  Such  small  margins, 
it  is  obvious,  may  be  lost  sight  of  among  other  things,  and 
easily  made  up  by  a  little  more  industry  on  the  part  of  those 
who  suffer.  They  may  also  affect  still  less  the  growth  of 
wealth,  through  the  community  bearing  what  loss  there  may 
be  out  of  its  income  and  accumulating  wealth  as  rapidly  as 
before.  There  is  an  inherent  difficulty,  then,  of  a  very 
formidable  kind,  in  showing  by  statistics  that  any  given 
economic  regime  is  more  favourable  to  the  material  welfare 
of  a  community  than  another.  Unless  the  differences  are 
extreme  and  marked,  it  seems  hardly  possible  that  there  can 
be  much  difference  in  the  results,  of  which  statistics  can  take 
note,  whether  a  community  is  free  trading  or  protectionist. 

Such  being  the  case  as  regards  statistics  generally,  it  is 
hardly  necessary  to  add  that  import  and  export  statistics 
alone  cannot  give  much  help.  They  are  even  irrelevant  to 
the  question  to  be  answered.  It  is  quite  conceivable  that  a 
•country  may  be  very  prosperous  without  foreign  trade  at  all, 


THE   USE   OF   IMPORT    AND   EXPORT   STATISTICS.  203 

or  with  very  little  foreign  trade,  or  that  for  special  reasons 
tlie  foreign  trade  of  the  least  progressing  country  as  a  whole 
may  he  making  greater  progress  than  the  foreign  trade  of  a 
more  progressing  country.  Were  the  British  Empire,  for 
instance,  to  form  one  customs  union,  the  foreign  trade  of  that 
union  would  probably  l)c  less  than  the  foreign  trade  of  the 
United  Kingdom  alone  is  now,  and  its  growth  or  decline 
would  be  less  important  in  proportion  to  the  whole  business 
of  the  empire  than  the  growth  or  decline  of  the  foreign 
trade  of  tlic  mother  country  is  now  to  the  mother  country 
itself.  The  progress  of  the  foreign  trade  of  different  countries 
is  thus  no  index  at  all  of  their  relative  progress  materially. 
Even  therefore  if  you  could  reduce  the  so-called  imports  and 
exports  of  different  countries  to  common  denominators,  and 
make  all  proper  allowances  for  changes  of  prices  and  the  like 
(hsturbing  influences,  which  I  have  already  shown  to  be 
most  difficult,  you  would  be  no  nearer  than  you  were  before  to 
proving  that  the  country  whose  foreign  trade  increases  fastest 
is  the  most  prosperous  materially.  There  is  a  more  serious 
difficulty  still.  Foreign  trade  is  trade  between  nations,  and 
the  foreign  trade  of  a  country  which  has  an  inferior  regiine, 
may  consequently  increase  as  much  in  amount,  and  perhaps 
infinitely  more  in  proportion,  than  the  foreign  trade  of  a 
country  with  a  superior  Tegime.  The  trade  of  the  inferior 
may  be  with  the  superior,  and  the  two  will  increase  ^ja7'i 
2^assu,  though  the  impetus  may  be  given  by  the  superior  and 
not  by  the  inferior.  We  may  see  this  very  clearly  if  we  i)ut 
the  hypothetical  case  of  two  countries,  the  one  free  trading 
and  the  other  protectionist,  trading  exclusively  with  each 
other,  that  is,  having  no  other  foreign  trade,  with  a  third 
country  doing  no  trade  itself  but  carrying  for  the  two  others. 
Clearly,  the  foreign  trade  of  the  free  trading  and  protectionist 
countries  must  exactly  balance.     Their  imports  and  exports 


204  THE    USE    OF    nrPOET    AXD    EXPORT   STATISTICS. 

■vnll  be  exactly  alike.  "WTiether,  to  give  a  practical  illustra- 
tion, the  foreign  trade  of  the  United  States  with  the  United 
Kingdom  has  been  the  result  of  the  impetus  of  the  former  or 
the  latter  •will,  I  think,  hardly  be  open  to  question.  It  is  the 
United  Kingdom  Avhich  by  its  purchases  has  stimulated  the 
foreign  trade  of  the  United  States,  small  as  that  trade  is 
compared  with  our  own.  In  any  case,  these  considerations 
show  sufficiently  that  the  increase  of  foreign  trade  proves 
nothing  by  itseK  as  regards  the  relative  material  prosperity 
of  different  countries.  The  circumstances  affecting  foreign 
trade,  besides  the  difierences  of  refjimc,  are  innumerable;  and 
above  all,  it  is  a  necessity  that  countries  with  different 
regimes  should  trade  with  each  other,  so  that  the  greater 
prosperity  of  free  trade  countries  may  cause  the  foreign  trade 
of  protectionist  countries  to  advance  more  rapidly  than  that 
of  their  own. 

But  while  statistics  are  thus  not  available  in  fjiving  a 
distinct  yes  or  no  to  the  cardinal  question  between  free  trade 
and  protection,  it  does  not  follow  that  they  are  of  no  use  at 
all.  Eightly  used  and  handled  they  may  contribute  materially 
to  the  solution  of  the  points  at  issue.  I  have  to  suggest 
various  ways  in  which  they  may  be  so  used. 

First.  The  proposition,  if  accepted,  that  statistics  are  not 
available  to  prove  directly  the  superiority  of  one  regime  to 
another  in  promoting  material  prosperity,  appears  to  be 
entirely  on  the  free  trade  side  of  the  argument.  It  is  the 
protectionist  on  whom  the  onus  of  proof  lies.  He  affirms 
that  if  the  State  interferes  with  trade  and  does  certain  things, 
the  greater  material  prosperity  of  a  country  will  ensue.  He 
is  bound  therefore  to  furnish  proof  that  the  State  ought  to 
interfere,  and  interfere  in  the  way  indicated.  The  free  trader, 
on  the  other  hand,  need  not  prove  anything  at  all.  He 
simply  wishes  to  let  things  alone  unless  it  can  be  shown  that 


THE   USE    OF   IMPORT    AND    EXPORT   STATISTICS.  205 

sometliing  should  be  done  ;  the  whole  onus  of  proof  is  on  his 
opponent.  When  it  appears,  therefore,  that  statistics  cannot 
be  appealed  to  in  the  direct  issue  betweon  free  trade  and  pr(j- 
tection ;  that  statistics  can  hardly  be  got  to  indicate  in  any 
^yay  the  superiority  of  one  regime  to  another ;  this  is  as  much 
as  to  say  that  the  protectionist  is  not  helped  by  statistics. 
One  gi-eat  branch  of  argument  is  cut  away  from  him.  Logi- 
cally tlien  the  unsuitability  of  statistics,  owing  to  their 
necessary  imperfections,  for  solving  the  direct  issue  between 
free  trade  and  protection,  is  a  material  fact.  In  pointing  out 
that  they  are  unsuitable  we  do  a  great  deal  to  destroy  the 
protectionist  case. 

It  may  be  asked,  then,  how  it  is  that  the  protectionist 
appeals  so  much  to  statistics — that  he  talks  of  the  greater 
increase  of  prosperity  in  protectionist  countries,  of  the  greater 
increase  relatively  of  tlie  foreign  trade  of  protectionist 
countries,  of  special  industries  promoted  by  protection,  and  so 
forth  ?  The  reply  is  tl>at  very  often  the  facts  appealed  to 
are  themselves  misunderstood,  being,  as  we  have  seen,  very 
difficult  to  read,  while  their  logical  treatment  is  a  difficult 
matter.  I  notice  in  all  these  discassions  that  the  statement 
of  the  major  premiss  is  avoided.  Tlie  protectionists  do  not 
make  clear  to  themselves  what  they  wish  to  prove.  They 
sliow,  for  instance,  that  the  United  States  is  prosperous ;  but 
that  is  not  what  they  have  to  prove.  Wliat  they  have  to 
prove  is  that  it  is  more  prosperous  than  it  would  have  been 
under  a  free  trade  regime,  a  statement  in  which  statistics 
cannot  help  them.  They  assert,  again,  that  the  foreign  trade 
of  protectionist  countries  increases  faster  than  that  of  free 
trading  countries  ;  but  what  they  have  really  got  to  prove  is 
not  only  that  it  increases  faster  than  that  of  other  countries, 
but  that  it  increases  faster  than  it  would  have  done  under 
free  trade,  and  that  this  more  rapid  increase  is  itself  an  iude.K 


206  THE   USE   OF  IMPORT   AND   EXPORT  STATISTICS. 

of  greater  growth  of  material  prosperity  generally  than/ 
would  have  otherwise  taken  place.  Tlie  proof  again  that 
special  industries  have  heen  fostered  by  protection  is  nihil  ad 
rem.  Wliat  has  to  be  proved  is  that  the  industry  of  the 
country  as  a  whole  has  prospered,  wliich  is  a  very  different 
thing.  Without  discussing,  then,  the  whole  case  between  free 
trade  and  protection,  we  are  entitled,  as  a  scientific  body,  to 
point  out  that  the  call  which  protection  makes  on  statistics  is 
one  which  cannot  be  answered.  The  protectionist  seeks  an 
affirmative  answer  to  a  question  which  statistics  cannot 
answer  affirmatively  or  negatively. 

We  may  perhaps  go  farther,  and  say  that  as  the  pro- 
tectionist relies  so  much  on  statistics,  and  has  nothing  else  to 
rely  on, — his  argument  is  always  an  appeal  from  theory  to 
facts — then  there  can  be  no  argument  for  protection.  This 
appears,  in  fact,  to  be  the  logical  position  of  the  controversy. 


VIL— SUBJECT  CONTINUED :  THE  NEGATIVE  USE' 
OF  IMPORT  AND  EXPORT  STATISTICS. 

Seco'iul.  While  statistics  can  be  of  no  use  to  the  pro- 
tectionist, they  may  be  of  use  to  the  free  trader,  negatively, 
by  affording  presumptive  conclusions  that  the  anticipations 
of  the  protectionists  are  unfounded.  Tlie  protectionist,  in 
arguing  that  a  country  will  be  better  off  under  protection 
than  under  free  trade,  implies  and  assumes  that  the  condition, 
under  free  trade  will  not  be  satisfactory,  that  this  is  the 
reason  for  not  letting  things  alone.  If,  then,  it  can  be  shown 
that,  taking  countries  as  they  stand,  the  condition  of  things 
is  tolerably  satisfactory  under  free  trade,  the  difficulty  of  tlie 
protectionist  would  be  enormously  increased.     The  reverse. 


THE    USE   OF   IMPOllT   AND    EXPORT    STATISTICS.  207 

as  we  liavc  seen,  would  prove  nothing  against  free  trade  logi- 
cally, but  if  free  trade,  on  the  average,  appears  to  do  as  well, 
(»r  better  than  proteetion,  the  protectionist  is  clearly  out  of 
court.  His  only  a})peal  is  to  statistics,  which  could  not  by 
any  possibility  help  him  ;  but  if  tlie  answer  they  give,  as  far 
as  it  goes,  makes  against  him,  he  is  hoplessly  in  the  wrong. 

Looking  at  economic  statistics  generally  in  this  way,  it  is 
jilain  that  free  trade  nations,  and  especially  the  United 
Kingdom,  have  nothing  to  complain  of.  The  fact  of  the 
United  Kingdom  having  made  great  strides  in  material 
prosperity  since  the  free  trade  period  is  undeniable,  and  is  not 
really  denied  by  protectionists.  Of  late,  they  say,  owing  to 
foreign  tariffs  and  other  causes,  the  results  are  less  satis- 
factory, and  they  shake  their  heads  ominously  about  the 
future,  but  the  advance  in  the  past,  I  apprehend,  is  not  denied. 
If  it  is  desired,  I  think  there  are  ample  materials  in  our 
Juiirnal  to  prove  the  contrary,  so  that  a  mere  passing 
reference  may  be  sufficient  for  me  to-night.  The  satisfactory 
residt  may  not  be  wholly  due  to  free  trade,  and  no  free 
trader  ever  said  that  it  was ;  Mr.  Newmarch's  repudiation  of 
any  such  idea,  in  his  paper  read  in  1878,  was  most  emphatic  ; 
but  it  has  been  consistent  with  free  trade,  and  it  is  upon 
protectionists  to  prove  that  the  result  with  protection  would 
have  Ijeen  better. 

We  are  concerned  to-night,  however,  with  import  and 
export  statistics  specially,  and  on  this  narrower  field  I  may 
perhaps  be  allowed  to  refer  to  one  or  two  facts  which  appear 
to  raise  an  insuperable  presumption  against  j^rotection.  I 
should  not  think  of  going  into  the  history  of  our  foreign 
tiadi'  exhaustively,  tlie  subject  having  been  treated  so  fully 
ly  ^Ir.  Xewmarch  in  1878,  and  our  special  business  to-night 
being  with  the  method  of  statistics;  l)ut  without  exhaustive 
treatment  a  few  broad  facts  can  be  made  to  stand  out  clearly 


208  THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS. 

enough.  Before  pointing  theni  out,  however,  I  must  again 
call  attention  to  the  remark  already  made,  to  the  effect  that 
the  progTess  of  foreign  trade  is  not  necessarily  an  index  of 
the  progress  of  material  prosperity  in  a  country  generally. 
It  may  or  may  not  be  so.  But  conceding  it  to  be  an  index, 
the  facts  of  our  experience  are  not  such  as  to  encourage  a 
Xjrotectionist  to  appeal  to  them.  Our  progress  has  been 
astonishing.  The  protectionist  may  imagine,  or  say  he 
imagines,  that  under  protection  we  would  have  done  better, 
but  surely  he  cannot  deny  that  under  free  trade  we  have 
done  well. 

The  first  facts  to  be  mentioned  are  those  relating  to  the 
movements   of    shipping.     Of   these   you   had   a   very   full 
account  at  the  last  meeting,  and  I  have  said  a  good  deal  to- 
night about  the  growth  of  our  shipping  business  as  a  separate 
business  ;  but  I  wish  now  to  speak  of  those  movements  as  an 
indication  of  the  growth  of  imports  and  exports.      To  some 
extent  they  are  a  better  indication  than  the  figures  of  imports 
and  exports  themselves.     The  latter  may  fluctuate,  as  we 
have    seen,  owing    to   changes   of  price;   but  if  increased; 
quantities  of  goods  are  carried,  whatever  nominal  sums  they] 
may  be  entered  at,  you  must  have  more  ships.      It  is  quite 
true,  of  course,  that  shipping  may  increase  disproportion- 
ately to  the  trade  through  tlie  articles  handled  being  more, 
largely  of  a  bulky  and  less  valuable  nature  than  before ;  but 
this  is  a  point  which  can  easily  be  inquired  into.    The  entries 
and  clearances  of  shipping,  then,  in  the  foreign  trade  of  the 
United  Kingdom  during  the  last  forty  years  have  progressed 
as  follows : 


THE    USE    OF    DirOirr    AND    EXPORT    STATISTICS. 


200 


T.ins. 

Increase  on  Previous 

Ten  Years. 

Amount.           1 

Per  Cent. 

1810 

'50 

'60 

70 

'80 

9,440,000 
14,505,000 
24,689,000 
36,640,000 
58,736,000 

5,065,000 

io,isi,noo 

11,951,000 
1>-2,01)6,000 

53-4 
70-3 
48-6 
60-4 

.Vnd  the  increase  from  first  to  last,  between  1840  and  1880, 
covering  the  whole  free  trade  period,  is  no  less  than 
40,290,000  tons,  and  525  per  cent.  To  he  quite  fair,  even  in 
dealing  witli  protectionists,  it  may  be  admitted  that  the 
increased  use  of  steamers  which  do  a  calling  trade  may  have 
caused  some  increase  of  entries  and  clearances  without  an 
increase  of  goods  carried  to  correspond  ;  but  the  self-interest 
<tf  ship-owners  may  of  course  be  trusted  to  fill  up  their 
vessels  as  much  as  possible.  Comparing  the  figures  with  the 
increase  of  population  in  the  interval,  it  appears  that  while 
the  entries  and  clearances  in  1840  were  0*3G  tons  for  each 
unit  of  the  population,  in  1880  they  were  173  tons  for  each 
unit  of  tlie  population,  an  increase  of  381  per  cent. 

We  may  give  some  idea  of  these  figures  in  another  way. 
The  entries  and  clearances  of  shipping  in  the  foreign  trade 
of  almost  all  foreign  countries  put  together,  excluding 
I'.ritish  colonies,  may  be  taken  as  140  million  tons.*  The 
increase  of  our  entries  and  clearances,  therefore,  since  1840 
is  equal  to  one-third  of  the  whole  existing  business  of  all 
foreign  countries  put  together.  Assuming  imports  and 
exports,  therefore,  to  have  increased  in  the  same  proportion, 
wi"  may  say  broadly  that  the  increase  of  the  foreign  trade  of 
the  United  Kingdom  since  1840  is  equal  to  one-third  of  the 


"  Sec  Statistical  Abstract  for  Foreign  Countries. 
11. 


210  THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS. 

whole  foreign  trade  of  the  worhl,  not  comprised  within  the 
British  Empire.  The  increase,  moreover,  is  equal  to  about  1§ 
tons  for  each  individual  of  the  United  Kingdom,  or  five-sixths 
of  a  ton  of  goods  conveyed  each  way.  If  a  growth  of  foreign 
trade  like  tliis  does  not  please  protectionists,  what  sort  of 
trade  is  it  which  will  satisfy  them  ? 

We  come  then  to  the  suggestion  that  the  goods  have 
changed  in  character.  They  are  said  to  be  more  bulky  than 
they  were.  This  is  especially  the  case,  we  may  be  told, 
with  the  exports,  where  the  increase  is  chiefly  in  coal  and 
pig  iron,  in  raw  materials.  But  this  does  not  prove  that  the 
real  values  involved  have  not  risen  in  proportion.  On  the 
contrary,  it  is  probable  that,  value  for  value,  an  export  of 
so  much  coal  or  pig  iron  implies  a  much  larger  employment 
for  labour  and  capital  within  the  country  than  an  export  of 
so  much  cotton  manufactures.  The  whole  value  in  these 
cases  is  an  export  of  the  produce  of  British  capital  and 
labour ;  whereas,  in  the  case  of  cotton  manufactures,  four- 
fifths  or  two-thirds  of  the  value  may  be  a  re-export.  In  other 
w^ords,  10  million  pounds  worth  of  coal  exported  may  mean  an 
export  of  as  much  produce  of  British  capital  and  labour  as 
50  million  pounds  worth  of  cotton  manufactures.  Xot  only 
so  :  the  fact  that  equal  values  of  coal  or  pig  iron  exported 
means  more  employment  for  shipping  than  values  of  cotton 
manufactures  implies,  as  the  shipping  is  mostly  British,  that 
there  is  an  immense  indirect  employment  for  capital  and 
labour  in  connection  with  the  shipments.  We  may  assume 
then  that  the  increase  in  the  movements  of  shipping  is  a 
very  good  index  of  the  increase  in  the  imports  and  exports 
themselves. 

We  may  look,  however,  at  the  actual  facts  of  a  few  chief 
articles,  always  remembering  the  circumstances  pointed  out 
by  Mr.  Newmarch  in  the  paper  already  referred  to,  that  the 


THE    USE   OF    IMPOUT    AXD    EXPORT    STATISTICS. 


211 


part  of  our  foreii^u  trade  which  has  most  conspicuously  in- 
creased is  tlie  miscellaneous  trade.  Take  first  the  exports 
of  cotton  yarn  and  piece  goods.  The  progress  we  find  is 
shown  as  follows  : — 


Cottou  Yarn. 

Cotton  Piece  Goods. 

Increase  on 

Increase  on 

Total. 
Mln.  lbs. 

Previous  Ten  Years. 

Total. 

Previous  Ten  Years. 

Amount. 

Per  Cent. 

Amount. 

Per  Cent. 

:\Ihi.  vds. 

1S40   .. 

ii8-5 

— 

— 

790 

— 

— 

'nO   .. 

I3i"4 

12-9 

II 

1,358 

567 

72 

T.0   .. 

197*3 

65-9 

50 

2,776 

1.418 

104 

70   .. 

i86-o 

(-)ll-3 

(-)6 

3,267 

491     . 

17^ 

'80   .. 

215-5 

29-5 

16 

4,496 

1,229 

38 

Note. — ^Percentage  increase  between  1840  and  1880:  cotton  yarn, 

84  per  cent.,  and  cotton  piece  goods,  468  j)ev  cent. 


On    the    same    plan   I   make    up    the    fullowin!.,^    short 
tables : — 


Exports  of  Iron  and  Steel. 


Increase  in  Pre\ 

ious  Ten  Years. 

Tons. 

Amount.                      Per  Cent. 

.Alius. 

1840     ..      .. 

o'3 

— 

— 

'50     ..      .. 

0-8 

0-5 

167 

'GO     ..      .. 

i"4 

0-6 

75 

'70     ..      .. 

2-8 

1-4 

100 

'80     ..      .. 

3-8 

1-0 

36 

Note. — Percentage  increase  between  1840  and  1880  equal  to  1167 
per  cent. 


1'   - 


212  THE    USE    01'    IMPOKT    AND    EXPOIiT    STATISTICS. 

Exports  of  Hardware  and  Cittlerij. 


Increase  on  Previous  Ten  Years. 

Amount. 

Per  Cent. 

Jlln.  £'s. 

1840     ..      .. 

I'3 

— 

— 

'50     ..      .. 

2-6 

1-3 

lOO 

'60     ..      .. 

3-8 

1-2 

46 

'70     ..      .. 

3-8 

— 

'80     ..      .. 

3-5 

(-)3 

(-)  8 

Note. — Percentage  increase  between  1840  and  1880  equal  to  169 
per  cent. 

Exports  of  ^[acliiner)j. 


Increase  on  Prei 

'ious  Ten  Years. 

Amount. 

Per  Cent. 

Mln.  £'s. 

1840     ..      .. 

0-6 

— 

— 

'50     ..      .. 

i-o 

0-4 

67 

'60     .,      .. 

3-8 

2-8 

280 

'70     ..      .. 

5'3 

1-5 

40 

'80     ..      .. 

9'3 

4-0 

75 

Note  — 
per  cent. 


Percentage  increase  between  1840  and  1880  equal  to  1483 


Exports  of  Coal. 


Increase  on  Previous  Ten  Years. 

Amount.            1           Per  Cent. 

Mlns. 

1840     ..      .. 

1-6 

— 

— 

'50     ..      .. 

3-4 

1-8 

112 

'60     ..      .. 

7-3 

3-9 

115 

'70     ..      .. 

II-7 

4-4 

60 

'80     ..     .. 

i8-7 

7-0 

60 

Note.- 
per  cent. 


■Percentage  increase  between  1840  and  1880  equal  to  1070 


THE    USE    OF    IMl'ORl'    AND    EXI'OKT    STATISTICS. 


218 


These  tables  of  course  are  not,  iiud  do  not  pretend  to  be 
exhaustive  as  regards  foreign  trade,  while  if  they  were 
exhaustive,  many  questions  would  be  suggested  as  to  the 
l)reci.se  character  of  the  increase,  the  countries  with  which  it 
takes  place,  and  other  particulars.  Comparing  these  exports, 
however,  with  the  above  stated  facts  as  to  shipping,  they 
serve  to  show  what  a  gigantic  growth  we  are  dealing  with. 
It  is  difficult  to  imagine  what  foreign  trade  there  can  be 
which  increases  more  rapidly.  I  have  omitted  giving  any 
(quantities  for  the  imports,  for  the  practical  reason  that  the 
(piantities  of  our  importations  are  less  in  dispute,  but  they 
are  easily  enough  accessible  to  all  concerned. 

The  facts  as  to  (piantities  being  thus  clear,  we  are  able  to 
use  the  facts  as  to  values.  The  whole  exports  of  Ikitish  and 
Irish  produce  between  IS-iO  and  1880,  according  to  the 
declared  values,  have  been  : — 


1840 
'50 
'60 
'70 

'80 


Tot 

ol 

Increase  on 

Previous 

Ten  Years. 

Amount. 

Per  Cent. 

Mln. 

£'s. 

£ 

51 

71 
135 
199 
223 

3 

4 
9 
6 
•  I 

20-1 
64-5 
G3-7 
28-5 

40 
90 

47 
12 

and  the  increase  between  1840  and  1880  is  335  per  cent. 
There  are  some  points  in  detail  to  be  observed  upon,  but  the 
progi-ess  generally  is  evidently  as  remarkable  as  that  ot 
entries  and  clearances  of  shipping  and  the  quantities  of  the 
principal  articles  of  export,  and,  taken  in  conjunction  with 
these  facts,  gives  fair  ground  for  supposing  that  the  whole 
foreign  export  trade  in  (piantities,  as  well  as  values,  has 
increased  in  about  the  same  degree. 


214 


THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS. 


Dealing  with  values  alone,  as  regards  the   imports,    we 
get  the  following  comparison : — 


Increase  on  Previous  Decade. 

Total. 

Amount. 

Per  Cent. 

Mln.  £'s. 

1854*   ..      .. 

143-5 

— 

— 

'60     ..      .. 

2IO'5 

67-0 

50 

'70     ..     .. 

303-2 

92-7 

44 

'80     ..      .. 

4II'2 

108-0 

36 

*  In  the  case  of  the  imports,  there  are  no  computed  or  dechxrecl 
vahies  before  1854. 


and  the  increase  since  1855  is  186  per  cent.  Thus  both  in 
imports  and  exports  there  has  been  an  enormous  increase 
for  the  United  Kingdom  during  the  free  trade  period — an 
increase  which  has  been  demonstrated  to  be  as  great  in 
quantities  as  in  values  in  the  case  of  the  exports,  and  which 
is  presumably  so  in  the  case  of  the  imports,  though  it  would 
encumber  this  paper  too  much  to  go  into  detail.  As  regards 
imports  at  least,  there  can  be  no  question  of  its  having 
continued  to  the  latest  date.  There  is  no  apparent  falling 
off  in  the  last  few  years  to  account  for. 

Clearly,  then,  in  these  figures  the  protectionist  has  a  very 
difficult  argument.  If  our  foreign  trade  had  progressed  less, 
the  onus  of  proof  would  still  have  been  on  the  protectionist 
to  show  that  under  another  regime  it  would  have  progressed 
more ;  logically,  figures  showing  a  less  progress  would  not 
have  helped  his  argument  a  bit.  But  the  figures  being  what 
they  are,  he  has  to  prove  that  protection  would  have  had  a 
better  result,  and  promises  better  in  future.     He  must 


"Gild  refined  gold,  and  paint  the  lih'." 


THE    USE    OF   IMPORT    AND    EXPORT   STATISTICS.  215 

Tlius,  negatively,  tlie  statistics  of  foreign  trade  are  nseful. 
Tlie  prosperity  of  the  last  forty  years  may  not  be  owing 
to  free  trade,  but  it  has  been  consistent  with  free  trade, 
and  protectionists  must  look  elsewhere  than  in  our  import 
and  export  statistics  for  any  argument  against  free  trade 
policy. 

There  are  one  or  two,  points,  however,  which  are  likely  to 
be  cavilled  at,  though  the  figures  themselves  will  help  to 
supply  an  explanation.  There  is  apparently  a  little  support 
given  by  some  of  the  figures  to  the  contention  that  in  recent 
years  foreign  trade  has  ceased  to  progress  quite  as  rapidly  as 
it  did  at  an  earlier  period.  The  increase  in  the  export  values 
is  only  12  per  cent,  in  the  last  decade,  as  compared  with  47 
per  cent,  in  the  previous  decade,  90  per  cent,  between  1850 
and  18G0,  and  40  per  cent,  between  1840  and  1850.  There 
is  a  similar  diminution  in  the  quantities  of  the  principal 
articles  exported,  though  not  in  all ;  while  in  one  decade  at 
least,  viz.,  between  1850  and  1860,  the  proportionate  growth 
of  the  movements  of  shipping  was  a  little  greater  than  it  has 
been  since.  A  little  consideration  will  show,  however,  I 
believe,  that  while  there  were  probably  real  causes  between 
1850  and  1860  for  a  greater  proportionate  increase  of  our 
foreign  trade  than  there  has  been  since — such  causes  as  the 
great  growth  of  railways  between  1840  and  1850,  which 
came  really  into  use  between  1850  and  1860,  the  gold 
discoveries,  and  the  great  colonisation  which  went  on  in  the 
hitter  decade — yet  the  diminution  in  the  rate  of  increase 
lately  is  much  less  than  it  appears  to  ])e.  The  period 
between  1850  and  1860  was  the  one  iu  wliich  the  first  effect 
of  the  gold  discoveries,  whicli  beyond  question  raised  jirices 
considerably,  was  experienced.  In  the  period  since  1870 
there  lias  l>een  a  general  decline  iu  prices,  aggravated, 
sjiccially  as  regards  our  own  exptjrts,  by  a  special  decline  in 


216 


THE    USE    OF    IMPORT   AND   EXPORT    STATISTICS. 


cotton.  Keeping  in  mind  then  the  important  element  of 
price,  we  see  reason  at  once  for  looking  more  to  the  quantities 
and  to  the  movements  of  shipping  than  to  the  vahies  only. 
The  figures,  in  fact,  corroborate  what  has  already  been  stated 
in  the  first  part  of  this  paper  as  to  the  importance  of  price. 
Unless  we  allow  for  this  element,  we  shall  be  bewildered  by 
the  figures. 

The  point  is  perhaps  worth  even  more  minute  consideration. 
Comparing  the  percentages  of  increase  of  the  values  of  the 
exports  and  of  the  movements  of  shipping,  we  get  the 
followiniT  results  : — 


1840-50 
'50-60 
'60-70 
'70-80 

1840-80 


Increase  of  Shippino 
Movements. 


525-0 


Increase  of  Export 
Values. 


Per  cent. 

Per  cent. 

53-4 

40 

70*2 
48-6 
60-4 

90 

47 
12 

Thus  between  1840  and  1850,  before  the  gold  discoveries 
had  caused  prices  to  rise,  and  when  they  were  probably 
tending  to  decline,  the  increase  of  shipping  was  rather  more 
than  the  increase  of  export  values  ;  in  the  following  decade, 
when  prices  were  undoubtedly  rising,  the  increase  of  export 
values  is  more  than  the  increase  of  shipping  movements ;  in 
the  third  decade,  viz.,  between  1860  and  1870,  when  prices 
were  probably  stationary,  the  rate  of  growth  is  about  even  in 
the  two  cases ;  in  the  last  decade,  when  the  level  of  inice 
has  probably  declined  considerably,  the  rate  of  growth  of 
shipping  remains  much  the  same  as  in  the  previous  decades, 
but  the  rate  of  growth  of  the  export  values  shows  a  diminu- 
tion.    To  my  mind  the  suggestion  of  this  table  as  to  a  fall  of 


THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS.  217 

])rices  between  1870  and  1880  is  most  dimt,  and  such 
iiuestions  of  price,  I  am  satisfied,  will  require  to  be  more  and 
more  considered.  "We  have  not  had  import  and  export 
figures  on  a  tolerably  satisfactory  basis  for  many  years  to 
deal  with,  and  we  are  only  beginnini;;  to  find  out  Ihc 
difficulties  of  using  them  when  long  periods  are  compared. 
Meanwhile  the  practical  conclusion  appears  beyond  question. 

I  have  to  suggest,  moreover,  what  has  already  been  stated 
in  the  previous  part  of  the  paper  as  to  the  increase  of  our 
shipping  business  as  a  means  of  accounting  for  the  non- 
increase  of  our  apparent  exports.  It  is  because  our  invisible 
exports  have  been  increasing  so  enormously,  that  there  is 
less  increase  of  the  visible.  But  it  is  the  same  thing  of 
course  ^\•hetller  we  export  the  produce  of  our  capital  and 
labour  stored  up  in  goods,  or  in  the  shape  of  repairs  to  ships, 
or  new  ships  Iniilt  to  replace  old  ones,  which  carry  the  foreign 
goods  of  the  world.  In  any  way  that  we  take  the  figures, 
there  has  obviously  been  an  enormous  growth  of  our  foreign 
trade  since  the  free  trade  period,  continued  to  the  most 
recent  date.  What  the  protectionist  has  to  prove  is  that 
l)rotection  would  probaldy  have  done  better  or  so  well. 

It  would  be  impossible  to  go  through  the  imports  and 
exports  of  foreign  countries  in  detail,  to  show  how  they  also 
raise  a  presumption  against  the  protectionist.  Looking  at 
the  difficulties  of  analysing  the  data  themselves,  and  allowing 
for  special  circumstances  which  may  have  affected  the  foreign 
trade  of  different  countries,  the  difficulty  of  inquiring  what 
the  facts  are  as  regards  foreign  countries,  and  of  finding 
suitable  pairs  of  fiee  trading  anil  protectionist  countries  for 
com})arison,  would  in  truth  l^e  insuperable.  To  mention  oidy 
some  of  the  difficulties  which  occurred  to  me  in  endeavouring 
to  form  a  group  of  protected  European  countries,  I  may  state 
that  the  fact  already  mentioned  as  to  the  recent  change  from 


218  THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS. 

official  to  real  values  in  Austria,  throws  out  all  comparisons 
as  regards  that  country  ;  and  that  for  Russia  comparisons  are 
equally  thrown  out  Ly  the  recent  depreciation  of  the  rouble 
and  rise  in  nominal  prices,  which  unduly  swell  the  figures  of 
the  foreign  trade,  while  a  reduction  of  the  rouble  to  specie 
value  in  each  year  would  be  open  to  some  exceptions.  For 
Germany,  again,  we  have  statistics  for  ten  years  only,  too 
short  to  be  of  any  value.  This  leaves  no  other  country  than 
France  among  the  great  European  States  as  to  which  a 
special  inquiry  would  seem  worth  while,  and  even  as  regards 
France  we  have  also  to  remember  that  the  separation  of 
Alsace  and  Lorraine  ten  years  ago  was  a  special  cause  of 
increase  in  the  foreign  trade,  what  was  home  trade  in  France 
becoming  in  fact  foreign. 

In  the  absence  of  any  general  grouping,  then,  I  shall  refer 
specially  to  two  foreign  countries  only — the  United  States 
and  France — the  former  a  protectionist  country,  wliich 
became  in  the  period  under  review  more  protectionist  than 
at  the  beginning,  and  the  latter  a  protectionist  country, 
wdiich  became  less  protectionist.  Is  there  anything  on  the 
face  of  the  figures  of  either  country  to  suggest  such  a  progress 
in  their  foreign  trade,  assuming  that  trade  to  be  a  good  index 
of  material  prosperity,  as  to  imply  that  protection  is  a 
specially  advantageous  regime  ? 

With  regard  to  the  United  States,  making  a  table  in  much 
the  same  form  as  that  for  the  United  Kingdom,  but  including 
specie,  the  general  figures  are  : — * 


*  I  make  use  here  of  the  figures  in   the  previous  Essay  on  the 
Foreign  Trade  of  the  United  States. 


TnK  USE  OF  nrroRT  and  export  statistics. 


219 


Foreiyn  Trade  of  the  United  States. 
[In  millions  of  pounds.] 


Imports. 

Exports. 

Increase  on  previous 

Increase  on  previous 

Amount. 

Period. 

Amount. 

Period. 

Increase. 

Per  Cent. 

Increase.       Per  Cent. 

£ 

£ 

1840  .. 

21 

— 

— 

26 



. 

'50  .. 

36 

15 

72 

30 

4 

16 

'(50  .. 

72 

36 

100 

80 

50 

16; 

'70  .. 

92 

20 

28 

90 

10                     I2.i 

'80   .. 

152 

bO 

65 

170 

80               89 

And  the  increase  in  the  imports  for  the  whole  period  is 
nearly  700  per  cent.,  and  in  the  exports  between  oOO  and 
600  per  cent.  In  proportion,  therefore,  there  is  a  greater  rate 
of  progress  in  protectionist  America  than  in  free  trade 
England,  though,  if  we  take  the  whole  period,  not  so  much 
greater  an  increase  as  to  raise  any  presumption  in  favour  of 
protection  as  being  mure  likely  to  develop  the  foreign  trade. 
I  need  hardly  say,  however,  that  in  such  a  question  the  mere 
proportion  of  increase  is  not  the  proper  test.  The  amounts 
are  also  material,  and  it  cannot  fail  to  be  observed  that  tlic 
United  States  being  a  larger  unit  tluin  the  United  Kingdom, 
lias  at  the  beginning,  and  still  has,  a  smaller  foreign  trade. 
The  whole  im.ports  are,  in  fact,  150  million  pounds  only  at 
present,  as  compared  with  400  million  pounds  and  upM-ards 
into  the  United  Kingdom;  and  the  whole  exports  are  170 
milliofi  pounds,  as  compared  with  223  million  pounds  of 
domestic  produce  exported  from  the  United  Kingdom;  the 
latter  figure,  l)esides,  as  already  explained,  not  including  the 
invisilile  ex]iort  in  tlie  shape  of  outlay  for  earning  freight. 


220  THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS. 

The  increase  in  imports  again  between  1840  and  1880,  is  130 
million  pounds,  as  compared  with  an  increase  of  268  million 
pounds  into  the  United  Kingdom  since  1854  only ;  while  the 
increase  of  the  exports  between  1840  and  1880  is  144  million 
pounds,  as  compared  with  171  million  pounds  in  the  case  of 
the  United  Kingdom,  again  remembering  in  the  latter  case 
that  our  invisible  exports  have  increased  so  much,  and  are 
not  reckoned  in  this  calculation. 

These  figures,  then,  rather  suggest,  if  anything,  tlie 
superiority  of  a  free  trading  to  a  protectionist  regime.  They 
are  something  for  the  protectionist  to  get  over  if  he  appeals 
to  progress  in  imports  and  exports  as  a  proof  of  the  superiority 
of  protection.  No  doubt  in  any  complete  discussion  we 
should  have  to  analyse  minutely  what  the  foreign  trade  in 
each  case  is  composed  of ;  while  it  would  be  fair  to  allow,  I 
think,  that  the  United  States,  from  its  geographical  extent 
and  the  ancient  development  of  its  manufactures — for  the 
eastern  States  are  as  much  an  old  country  as  England — may 
have  a  smaller  foreign  trade  in  proportion  than  another 
country  of  less  extent  with  large  manufactures,  or  another 
country  of  large  extent  without  manufactures.  It  is  an 
empire  within  a  ring  fence,  and  the  foreign  trade  of  the 
British  Empire,  if  that  empire  were  made  a  customs  union, 
would,  as  already  stated,  be  less  than  the  foreign  trade  of  the 
United  Kingdom  now  is,  and  certainly  much  less  in  pro- 
portion to  the  home  trade.  Still  all  these  nice  considerations 
are  out  of  place  in  the  mouths  of  protectionists,  who  have 
dwelt  lately  on  the  wonderful  progress  of  the  American 
foreign  trade.  The  figures,  in  the  way  they  use  them,  turn 
against  themselves. 

Coming  to  the  French  figures,  I  have  to  sul)mit  a  similar 
table,  beginning,  however,  in  1850  only,  as  there  are  only 
official  values  in  1840  : — 


Till':    USH    OF    IMl'OKT    AM*    KXl'OUT    STATISTICS. 


221 


Goicral  Impord^  info  France,  'irul  l'..i purls  <;/'  Domcslir  I'mdncr. 
[In  iiiillinns.] 


Imiinrts. 

Exports. 

Increase 

Increase 

Amount. 

on  previous 
Period. 

Per  Cent. 

Amount. 

on  previous 
Period. 

Per  Cent. 

£ 

£ 

£ 

£ 

1850  .. 

45 

— 

— 

43 

— 

— 

'60   .. 

io6 

61 

135 

91 

48 

109 

70   .. 

140 

34 

33 

112 

21 

22 

'80  .. 

245 

105 

75 

139 

27 

'' 

Here  again  the  rate  of  growth  is  apparently  as  great  as 
that  of  the  United  Kingdom,  though  an  exact  comparison 
is  iin])ossible,  as  we  cannot  go  back  to  1840.  The  amount 
of  trade  and  amount  of  growth,  however,  are,  like  those  of 
the  United  States,  much  smaller  than  the  amount  and 
growth  of  our  own  trade,  although  France,  like  the  United 
States,  is  a  larger  unit.  In  the  imports  the  growth  is  200 
million  pounds  between  1850  and  1880,  as  compared  with 
28(i  million  pounds  in  the  United  Kingdom,  between  185-4 
and  1880,  and  in  the  exports  it  is  9G  million  pounds  between 
1850  and  1880,  as  compared  with  151  million  pounds  in  the 
same  period  in  the  United  Kingdom.  There  is  nothing  then 
in  the  French  figures  to  make  a  case  for  the  protectionist, 
while  there  is  ground  for  claiming  that  between  1800  and 
1880  France  had  made  considerable  steps  in  the  direction  of 
free  trade,  so  that  whatever  progress  had  been  made  might  be 
ascribed  to  free  trade,  and  not  to  protection.  Tliere  is  no 
need,  however,  to  press  this  point.  France  may  be  taken  as 
a  ])rotectionist  country.  There  is  surely  nothing  in  the 
figures  to  raise  any  doubt  of  our  free  trade  regime,  always 
remembering,  besides,  our  own  invisible  exports. 

It  is  interesting  to  note,  in  passing,  the  great  augmentation 


222 


THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS. 


of  French  trade  between  1850  and  1860,  a  sign  of  the  rise 
of  prices  I  have  ah-eady  suggested  in  connection  with  the 
English  figures  for  the  same  j)eriod.  In  France,  however, 
the  augmentation  may  partly  be  due  to  the  more  intimate 
connection  which  then  took  place  between  France  and  its 
neifThbours  on  the  different  land  frontiers,  which  must  have 
been  a  powerful  special  cause,  I  believe,  for  the  development 
of  foreign  trade  among  inter-continental  countries. 

To  bring  these  figures  to  a  point,  it  may  be  useful  to  look 
at  a  calculation  per  head  of  the  population  in  each  case : — 

Imports  and  Exports  per  Head  of  the  Popidation  in  England,  France, 
and  the  United  States  compared. 


Imports — 
1810  ., 
'50  ., 
'60  .. 
'70  ., 
'80     .. 

Exports — 
1840  . 
'50  ., 
'60  . 
'70  . 
'80     ., 


United  Kino-dom. 


5 

7 

9 
II 


7 

14 
i8 


1  i8 

2  I  I 

4  14 

6  7 


d. 


9 

lO 

7 
1 1 


United  States. 


s. 
5 
10 
6 
8 


d. 
2 
9 
1 


1  11  1 
16  2 

2  10  11 

2  6  11 

3  8  1 


France. 


1  5      - 

2  17       4 

3  15       8 
6125 


1 1 


3 

9  2 

-  6 

15  2 


*  Year  1854. 


Thus  our  imports  are  still  about  four  times  per  head  those 
of  the  United  States,  and  twice  per  head  those  of  France,  and 
our  exports  are  about  twice  those  of  either  country,  not 
counting,  what  I  must  always  insist  on,  our  invisible  exports. 
The  increase  of  our  imports  per  head  since  1850  is  also 
double  the  whole  of  the  present  imports  per  head  into  the 
United  States,  and  about  equal  to  the  present  imports  per 
head  into  France,  and  the  increase  of  our  exports  since  the 


THE    USE   OF    nri'ORT    AND    EXPORT    STATISTICS.  223 

same  date  is  between  25  and  50  per  cent,  more  than  tlie  total 
exports  per  head  in  either  case.* 

"We  may  conclude,  then,  that  not  only  has  England  made 
satisfactory  progress  in  its  foreign  business  under  free  trade, 
but  the  most  prominent  foreign  countries  have  advanced  less 
under  protection.  The  onus  of  proof  thus  laid  on  the 
protectionist  to  show  that  we  would  have  done  better  than 
we  have  done  under  protection,  or  that  we  shall  do  better  in 
future  with  protection,  appears  to  me  overwhelming.  There 
is  no  bearing  up  against  it.  Thus  statistics,  though  they 
cannot  logically  prove  the  affirmative  in  the  direct  issue 
between  free  trade  and  protection,  from  the  difficulty  of 
finding  exactly  parallel  cases  and  eliminating  other  causes, 
may  be  used  to  prove  negatively  that  there  is  nothing  in  the 
apparent  facts  to  help  the  protectionist.  The  presumptions 
are  altogether  against  the  latter. 


nil.  — SUBJECT  COXTINUED:  OTHER  USES  OF 
IMPORT  AND  EXPORT  STATISTICS.  COX- 
CLUSIOX. 

A  third  way  in  which  statistics  may  be  used  in  the  argument 
is  to  show  that  protection  does  certain  particular  things 
wliich  are  obviously  of  an  injurious  tendency,  wliile  there  is 
and  can  be  no  proof  that  the  advantages  of  protection 
counterbalance  these  evils ;  and  on  the  other  liand  that  free 
trade  effects  certain  ends  which  are  obviously  ])eneficial, 
which  are  additive  to  the  welfare  of  a  community,  without 
any  drawbacks.  Facts  of  this  nature  corroborate  the  general 
theory  of  free  trade,  though  they  do  not  demonstrate  com- 

*  For  later  figures  <as  to  English,  French,  and  Anieriran  foreign 
trade,  I  may  refer  to  the  Tables  I  laid  before  the  Koyal  Commission  on 
Trade  Depression. 


224  THE    USE    OF   IMPORT    AND    EXPORT   STATISTICS. 

pletely  and  logically  by  themselves  that  the  one  regime  is 
better  than  the  other. 

We  may  examine  what  a  few  of  these  facts  are.  I'eoples 
adapt  themselves  quickly  to  any  regime,  and  when  a 
particular  regime  has  been  long  established,  it  is  difficult 
to  see  what  its  permanent  effects  are  ;  but  when  changes  are 
made,  the  nature  of  the  influence  may  be  perceived,  and  it  is 
from  such  transition  periods  we  get  evidence  for  or  against 
the  one  regime  or  the  other. 

To  go  back  a  long  way,  let  me  refer  you  to  a  comparatively 
old  book,  Sir  Henry  Parnell's  '  Financial  Eeform,'  published 
in  1832.  At  pages  37-39  ct  seq.  of  the  book,  this  author 
gives  numerous  instances  of  the  effect  of  high  duties  in 
checking  consumption — that  is,  in  diverting  trade  and 
imposing  various  hardships  on  the  community.  He  refers 
to  tea,  tobacco,  wine,  spirits,  and  other  articles,  in  which  an 
increase  of  taxes  produced  no  more  or  little  more  revenue ; 
and  I  shall  quote  as  a  specimen  what  he  says  of  flint  and 
plate  glass : — 

"In  1813  the  duties  on  flint  and  plate  glass  were  doubled. 
In  four  years  to  1813,  the  average  annual  quantity  made  for 
home  consumption  was  66,500  cwts.  In  the  four  years 
following  1813,  the  annual  average  quantity  was  only 
30,000  cwts.  The  duties  on  all  other  kinds  of  glass  were 
doubled  in  the  same  year.  The  revenue  received  in  the  four 
years  preceding  1813  was,  on  an  average,  £340,000 ;  that 
received  in  the  three  years  following  1813  was,  on  an  average, 
£395,000,  so  that  the  doubling  of  the  duties,  instead  of 
producing  £340,000,  produced  only  £55,000." 

In  the  opposite  sense  Sir  Henry  Parnell  then  refers  to 
numerous  remissions  of  high  duties  which  produced  increase 
of  revenue,  and  I  shall  again  only  mention  the  case  of  flint 
•^dass,  in  which  a  reduction  of  duty,  in  1825,  from  98s.  to  5().s'. 


Tin:  rsK  of  imtout  and  export  statistics.         225 

])er  cwt,  Avas  I'ollowctl  by  an  increase  of  cun.sum])tiuii  rroiu 
uO.OOO  to  47,000  cwts.  annually.    Sir  Henry  Parnell  adds  :— 

"The  Committee  of  Finance  state, in  their  fourth  report  on 
the  revenue  and  expenditure,  that  if  the  revenue  had  fallen 
oil"  in  the  five  years  from  1825  to  1828  (sir)  in  the  same  jao- 
portion  that  taxes  had  been  reduced,  the  diminution  of  it 
would  have  been  9  juillion  pounds;  but  that,  owing  to 
increased  consumption,  it  had  only  fallen  off  al^out  one-third 
of  that  sum." 

No  doubt  Sir  Henry  Parnell  is  speaking  of  high  taxes 
generally,  but  the  greater  includes  the  less,  and  high  tariffs 
of  a  protective  character  must  have  exactly  the  same  or  a 
worse  effect  in  diverting  industry  and  diminishing  consump- 
ti(ju  as  high  taxes  of  a  non-protective  character.  It  is  the 
tendency  of  the  system  which  is  exhibited  in  such  instances 
as  th(jse  given  by  Sir  Henry  Parnell.  The  book  I  refer 
to  is  comparatively  forgotten  now-a-days,  but  it  was  famous 
once,  and  those  who  look  into  it  will  find  it  to  deserve  its 
rejmtation. 

Another  case  of  the  effect  of  the  large  remission  of  duties 
at  the  period  of  transition,  is  supplied  by  the  experience  of 
what  occurred  in  this  country  in  the  first  tw(j  years  after  the 
introduction  of  the  free  trade  tariff  of  1842.  Historically 
this  experience  had  a  great  deal  to  do  with  the  practically 
unanimous  conversion  of  the  country  to  free  trade  principles, 
but  the  striking  nature  of  the  facts  statistically  is  still  worth 
repeating.  They  are  recorded  for  us  in  a  little  book  of  ^Ir. 
Ciladstone's,  not,  I  fear,  very  well  known,  entitled,  '  liemarks 
upon  Kecent  Commercial  Legislation,'  published  in  1845.* 
It  would  be  hopeless  for  me  to  attempt  to  give  a  condensed 
account  of  this  book,  to  which  I  can  but  refer  you  ;  but  among 

•  Loudou  :  Johu  Murray,  liyiij.    Third  edition, 
n.  Q 


22G  THE    USE    OF   IMPOET    AND    EXPORT    STATISTICS. 

the  principcal  points  I  note,  (1)  that  the  calciUated  money  loss 
of  the  reductions  of  the  tariff  in  1842-44  was  £5,142,000, 
and  that  other  duties  were  repealed  or  reduced,  involving  a, 
money    loss    of    £1,102,000,   making    together    a    sum    of 
£6,304,000,  and  that  the  free  surplus  of  the  income  tax  over 
and  above  what  was  required  to  supply  actual  deficiency  was 
only  £2,621,000.     This  was  all  that  was  really  required,  as 
the  event  proved,  to  balance  remissions  of  taxation  amounting 
to  £6,304,000  (pp.  12  and  13),     (2)  The  mean  estimated  loss 
from   remissions   of    duties   on   raw   material    mainly   was 
£1,452,000.  and  the  actual  loss  in  the  first  year  after  the 
tariff  Act  was  about  this  sum ;  but  this  first  year  was  a  year 
of  great  depression,  and  the  actual  loss  in  the  second  year 
was  £1,133,000  only,  showing  a  recovery  in  that  year  of 
£325,000  on  a  total  of  about  3  millions  only  (pp.  27  and  28). 
(3)  The  net  loss  of  revenue  from  a  great  remission  of  the 
timber   duties,  while   it  was   greater  in   the   first   year  by 
£114,000  than  Sir  Eobert  Peel  had  estimated,  was  less  in  the 
second  year  than  he  had  estimated  by  no  less  a  sum  than 
£193,000,  showing  a  great  recovery  in  the  trade  (pp.  36  and 
37)  ;  and  (4)  the  predictions  of  injury  to  our  manufactures 
and  other  industries  by  exposing  them  to  foreign  competition 
— there  was  quite  as  much  talk  of  foreign  competition  then 
as  there  is  now — were  ludicrously  falsified  in  the  case  of  cork- 
cutting,  candle-making,  vinegar-making,  and  other  industries 
(pp.  49  ct  scq.).     In  all  these  matters  a  free  trade  tariff  had 
apparently  done  what  it  was  expected  to  do,  and  had  con- 
tributed to  swell  the  volume  of  national  trade.     As  I  have 
said,  I  am  by  no  means  condensing  the  volume,  which  is 
itself  in  a  liighly  condensed  form,  Ijut  only  pointing  it  out  as 
a  mine  of  information  on  the  proposition  that  the  change 
from  a  protective  to  a  free  trade  rerjimc  appears  to  stimulate 
trade,  from  which  we  infer  that  the  stimulus  continues  to 


THE   USE   OF   IMPORT    AND    EXPORT   STATISTICS.  '227 

operate  al'tiTwanls,  tliuu-h  it  becoiues  impossible,  from 
change  of  circumstances,  to  compare  in  a  strictly  logical 
manner  a  free  trading  and  a  protectionist  reyimc. 

A  third  source  of  information  tu  which  rel'erence  cannot 
be  too  often  made,  is  ]\Ir.  "Wells's  Aaluable  reports  as  com- 
missioner of  internal  revenue  in  the  United  States.     These 
are  so  well  known  that  I  may  refer  to  them  very  briefly 
only.     "We  hear  a  great  deal  of  the  growth  of  certain  manu- 
factures in  the  United  States  which  ha^•e  been  ])rotectcd,  but 
these  reports   show  clearly  tlie  reverse  of  the  medal — the 
injury  to  other  industries  incidental  to  these  changes.     Thus 
the  first  report  for  18GG  dwells  largely  on  the  injury  to  the 
woollen  manufacture  by  the  protective  tariff  on  wool  designed 
to  protect  the  growth  of  raw  wool.     Then  in  the  report  for 
18G9  we  have  many  such  statements  as  this  about  boots  and 
shoes,  viz.,  that  the  export  value  declined  from  1,329,000 
dollars  in  18G3  to  082,000  in  18G7,  and  475,000  dollars  in 
18G9.    Lastly,  there  is  the  well-known  story  of  the  decline  in 
the  American  shipping  trade,  and  the  great  increase  in  the 
amount  of  the  foreign  trade  of  the   United  States   itself, 
carried  on  in  foreign  shij^s.     ]\lr.  "Wells  gives  a  table  at  p.  30 
of  the  report  for  18G7,  showing  even  then  the  i)reponderance 
of  foreign  vessels  in  the  carrying  trade  of  the  United  States, 
and  calculating  the  amount  which  the  United  States  has  to 
pay  to  foreigners  in  consequence,  the  opposite  of  tlie  calcula- 
tions  I   have   submitted  to   you   to-night   as   to  what  this 
country  has   to  receive.      These   are   all   instances  of  loss 
arising  through  protectionist  measures,  and  they  should  be 
remembered,  as  lieing  undoubtedly  in  operation  as  a  check 
to  industry,  though  we  cannot  well  see  the  effects  from  day 
to  day,  when  a  country  has  adapted  itself  to  a  ])rolectiouist 
rei/imc.     What  they  prove  is,  that  protection  does  not  add  to 
the  industry  of  a  country,  but  that  it  only  diverts  the  industry 

Q  2 


228 


THE    USE    OF   niPOET    AND    EXPORT    STATISTICS, 


at  a  great  expense  at  the  time  and  presumably  at  a  continuous 
expense.  The  loss  is  certain  and  the  gain  entirely  proble- 
matical, however  much  it  may  be  proved  that  certain  special 
industries  have  been  fostered  by  protection. 

As  there  are  many  later  figures  about  American  sliipping 
since  the  date  of  Mv.  Wells's  report  in  1869,  and  there  is 
still  a  vague  impression  that  it  was  the  '  Alabama '  which 
diverted  shipping  business  from  the  United  States,  I  may 
be  allowed  to  notice  briefly  these  later  figures,  and  see  how 
far  the  impression  as  to  the  '  Alabama '  is  confirmed.  The 
first  set  of  figures  show  the  increasing  preponderance  of 
foreign  vessels  in  the  American  carrying  trade.  For  the  years 
ended  30th  Jime,  1871-80,  we  get  the  following  figures : — 

Table  showing  American  Imports  and  Exports  Carried  in  American  ami 
Foreign  Vessels  respectively, 

[In  millions  of  dollars.] 


In  American  Vessels— 

1871  

72  

73  

74  

75  

76  

77  

78  

79  

'80  

In  Foreign  Vessels — 

1871  

72  

73  

^      74  

75  

7G  

77  

78  

79  

'80  


Exports  of 
Domestic  Produce 


l8r 
l6l 

163 
166 

145 
160 
156 

159 
122 
109 


376 
381 
478 
521 

493 
480 

515 
557 
588 

719 


Imports. 


163 
177 
174 
176 
158 
143 
151 
146 
144 
164 


863 
445 
472 
405 
382 
321 
329 
307 
310 
579 


Total. 


344 
338 
337 
342 
303 
303 
307 
305 
266 

^73 


739 
826 
950 
926 
877 
801 
844 
864 
898 
1,298 


TUE    USE    OF    I.Ml'OKT    AND    KXI'OKT    STATISTICS. 


220 


A  lable  like  this  speaks  Un-  itself.  AVliile  llie  aiuimnt  of 
American  trade  carried  in  IbreiLin  vessels  increases  in  ten 
years  from  739  million  to  1,298  million  dollars,  or  more  than 
70  per  cent.,  the  amount  carried  in  American  diminishes  from 
:U4  to  273  million  dollars.  The  American  share,  which  is 
nearly  half  the  foreign  at  the  beginning  of  the  period,  is  at 
the  close  just  about  a  fifth  of  the  foreign. 

The  second  set  of  figures  relates  to  American  ship-building. 
I  give  the  figures  for  twenty  years,  covering  the  whole  of  the 
*  Alabama '  period.     They  are  as  follows  : — 

Tuuiutfje  of  Vessels  AunuaUy  Built  in  the  United  States  in  the  Years 

18G0-80. 
[In  thousands  of  tons.] 
Thousand 


Year. 

1860 
'61 
'62 
'63 
'64 
'65 
'66 
'67 
'68 
'6!) 
70 


Tons. 

213 

1871 

233 

'72 

175 

'73 

310 

74 

415 

75 

383 

76 

336 

77 

303 

'78 

285 

79 

275 

'80 

276 

Thousand 
Tons. 

•      273 

2og 

••      359 

..     432 

..     297 

203 

176 

••     235 

••      193 

..      157 


AVhat  this  table  shows,  I  think,  is,  that  American  ship- 
building did  not  fall  oir  till  after  the  war.  From  18G3,  the 
third  year  of  the  war,  down  to  and  inclusive  of  1871,  the 
ship-building  is  larger  than  in  18G0  and  1801,  and  not  much 
short,  I  may  state,  of  the  figures  in  the  previous  decade, 
which  was  one  of  great  prosperity  in  American  shipping. 
.\s  late  again  as  1873  and  1874  the  building  is  considerable. 
I  think  we  may  infer  from  this  that  down  to  a  very  recent 
period  even  American  ship-building  and  ship-owning  hail  a 
sufficient  basis  for  its  development,  if  that  development  had 
not    been   checked   liy  external  causes.     The  effects  of  tlie 


230  THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS. 

'  Alabama '  would  in  fact  have  been  very  speedily  recovered 
from  but  for  other  causes.  Probably,  indeed,  the  operation 
of  the  civil  war  was  not  so  unfavourable  as  it  seemed.  If 
ship-building  for  private  individuals  was  checked,  there  was 
a  great  demand  for  Government  ships,  and  miscellaneous 
vessels  of  all  kinds,  and  at  the  close  of  the  war  there  was 
nothing  to  prevent  American  ship-builders  and  ship-owners 
from  recovering  some  of  the  ground  they  had  lost.  It  may 
perhaps  be  doubted  whether  even  with  a  free  trade  tariff  in 
America  the  results  would  not  have  been  the  same  as  they 
have  been.  There  were  natural  causes,  I  believe,  operating 
in  favour  of  the  extension  of  the  industry  in  British  hands. 
But  that  the  American  tariff  made  impossible  the  extension 
of  American  ship-building,  wliich  would  otherwise  have  been 
difficult  only,  is  beyond  doubt. 

Last  of  all,  coming  to  more  recent  times,  the  experience  of 
the  high  tariff  in  Germany  may  be  referred  to  as  proving 
that  those  particular  evils  happen  which  free  traders  predict 
from  such  a  tariff  as  Germany  has  established,  viz.,  a  high 
price  of  food,  the  deterioration  of  the  position  of  the  labourer, 
and  a  general  malaise.     On  this  head  I  need  do  no  more  than 
mention    the    well-known    paper    containing    extracts    from 
reports  of  the  German  Chambers  of  Commerce  respecting  the 
new  tariff  and  its  effects,  lately  presented  to  Parliament  by 
the  Board  of  Trade.*     The  reports  summarised  in  that  paper 
do   not  contain  many  figures,  but  the  statements  are  dis- 
tinctly quantitative,  and  when  a  sufficient  time  has  elapsed 
we  shall  no  doubt  have  the  statistics. 

Thus  in  many  ways  statistics  can  be  used  to  show  that 
the  tendencies  of  free  trade  and  protection  are  what  they  are 
said  by  free  traders  to  be — the  former  additive  to  the  material 

*  See  C.  3111.    Session  1882. 


THE    USE    OF    IJirORT    AND    EXPORT   STATISTICS.  231 

prosperity  of  a  country,  the  latter  suUradive,  in  some  of 
their  effects  at  least,  so  that  no  proof  can  be  given  of  their 
being  on  balance  beneficial.  The  quantity  of  evidence  of 
this  sort  is  overwhelming — I  have  only  given  a  few  instances. 
If  we  keep  in  mind  the  exact  logical  value  of  this  evidence, 
it  is  destructive,  I  believe,  of  the  protectionist  case,  as  far  as 
the  appeal  to  statistics  is  concerned.  In  the  absence  of 
direct  comparisons  between  free  trade  and  protectionist 
recjinies,  which  is  a  circumstance  entirely  against  the  pro- 
tectionist, all  the  indirect  evidence  of  tendencies  exhibited  at 
transition  periods  is  in  favour  of  the  free  trader. 

A  fourth  way  in  which  statistics  may  help  in  this  con- 
troversy is  by  demonstrating  the  confusion  of  ideas  which 
one  always  finds  to  be  of  the  essence  of  a  fair  trade  argument. 
The  diflliculty  in  dealing  with  these  arguments  is  the  diffi- 
culty  of  understanding    them   only,   of  trying   to   form   a 
conception  of  wdiat  is  in  the  mind  of  your  opponent.      "VVe 
are   told   at   one  time  that  our  foreign  trade  is  falling  off 
enormously,   the   alleged   proof  being  that  the    exports   of 
domestic  produce  have  declined  in  value  ;    while  the  obvious 
fiict,  apart  from  statistics,  is  the  preponderance  of  English 
foreign  trade  in  the  business  of  the  world,  so  that  if  the 
figures  apparently  showed  the  contrary,  that  would  be  no 
reason  for  arriving  at  a  conclusion  with  whicli  other  facts 
would  not  fit  in,  but  a  reason  only  for  studying  and  inquiring 
into   the   figures  themselves,  and  seeing   what  they  really 
meant,  when  properly  rectified.    We  are  told  at  another  time 
that    imports    of    manufactured    articles   into   the    Ignited 
Kingdom   are   increasing,   leading   to   the   decay    ff  manu- 
facturing at  home  ;  the   fact   being,    as   distinguishotl  from 
what  some  statistics  may  show  or  appear  to  show,  tliat  there 
never  was  more  manufacturing  than  there  is  in  England  at 
the  present  time,  of  which  the  obvious  proof  is  the  rapid 


232  THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS. 

increase  of  the  population  in  recent  years,  and  the  fact  that 
pauperism  has  been  stationary  or  declining.  If  any  statistics 
therefore  appear  to  show  the  contrary,  tliat  is  only  a  reason 
for  studying  the  statistics  with  all  the  collateral  aids 
possible,  not  f9r  blindly  rushing  at  a  conclusion  with  which 
nothing  else  will  agree.  Similarly  we  have  had  the  excess  of 
imports  in  a  country  dealt  with  as  a  proof  that  the  country 
is  running  into  debt ;  the  excess  of  exports  of  other  countries 
used  as  a  proof  that  they  are  prosperous,  these  countries  being 
also  assumed  not  only  to  be  protectionist,  but  to  owe  their 
great  exports  to  protection,  and  so  forth  ;  the  real  facts  as  to 
whetlier  one  country  is  running  into  debt  and  another 
gaining  not  being  otherwise  inquired  into.  The  peculiarity 
of  most  such  ideas  is,  that  even  if  true  they  do  not  help  the 
protectionist  argument,  which  is  of  such  a  kind,  as  we  have 
seen,  that  it  cannot  be  helped  by  statistics  ;  but  the  so-called 
arguments  and  statements  are  themselves  misleading  and 
unintelligible.  Now  one  supreme  use  of  the  study  of 
statistics,  including  import  and  export  statistics,  which  is  our 
special  subject  to-night,  is  to  clear  up  all  this  confusion ;  to 
introduce  true  ideas  where  there  are  strictly  no  ideas  at  all — 
no  picture  of  M'hat  is  really  going  on  in  the  world ;  and  in 
this  way  to  purge  the  mind  of  any  tendencies  to  protectionist 
heresy.  The  mind  capable  of  thinking  about  economic 
questions  from  a  statistical  point  of  view,  and  forming  a  true 
jiicture  of  the  facts  of  the  business  world,  would  not,  I 
maintain,  be  liable  to  the  influence  of  protectionist  ideas.  It 
is  not  among  leading  business  men  in  the  City,  or  men  con- 
versant with  great  business  affairs  anywhere,  with  the  single 
exception  perhaps  of  I*rince  Bismarck,  that  you  find  these 
confused  notions^  which  are  the  congenial  soil  of  protectionist 
lieresy. 

How  statistics  helj)  in  these  matters  has  ah-eady  been  set 


THE    USE    OF   IMPORT    AND    EXPORT    STATISTICS.  23P> 

I'oilli,  I  liiipc,  to  some  extent,  hy  tlu;  discnssioii  of  llic  excess 
of  iinports  controversy,  and  b}'  reference  to  nuuiy  special 
points.  But  a  few  more  remarks  may  be  permitted  to 
illustrate  the  extreme  confusion  of  ideas  wliicli  require  to  l)o 
cleared  up.  To  come  back  to  the  excess  of  iiiiiH»its  con- 
troversy ;  even  if  the  excess  of  imports  meant  wliat  it  is 
assumed  to  mean,  it  would  not  help  the  protectionist,  but  the 
real  facts  are  wholly  different  from  the  apparent  ones,  and 
any  true  study  of  the  su])ject  i;ives  quite  a  different  idea  of 
the  business  activity  of  Phigland  from  the  careless  one.  Our 
exjiorts  of  British  produce  being  nominally  223  million 
pounds,  of  which  about  60  million  pounds  is  raw  material 
previously  imported,  the  real  export  of  the  produce  of  British 
capital  and  labour  shown  in  the  so-called  exports  is  thus 
about  160  million  pounds  only.  We  have  found,  however, 
on  investigating  the  facts,  that  our  unrecorded  exports,  in 
the  shape  of  freights  carried  and  other  charges  on  the 
conveyance  of  goods,  apart  altogether  from  interest  on  in- 
vestments abroad,  amount  to  about  80  million  pounds — 
about  half  the  real  amount  of  our  recorded  exports  of  ]5ritish 
produce — so  tliat  without  having  some  view  of  these  unre- 
corded expiirts,  we  have  no  true  idea  of  English  trade. 
Without  taking  the  unrecorded  figures  into  account,  we 
should  err  in  our  appreciation  of  the  actual  fact  of  England's 
business  activity  by  30  per  cent,  or  more.  It  is  not  that  tlie 
statistics — the  figures  themselves — are  wrong.  They  merely 
require  study  and  careful  interpretation  to  get  at  the  lacts 
which  underlie  the  statistics. 

Another  illustration  of  how  the  true  study  of  statistics 
clears  up  false  concejitions,  is  sup[)lied  by  the  confutation  of 
many  histfjrical  arguments  which  have  recently  bei'u  used  by 
i'air  traders.  Not  long  ago  an  evening  journal  o(  the  very 
highest   literary   rejmtation,   admitted   into    its   columns    a 


234     THE  USE  OF  IMPORT  AND  EXPORT  STATISTICS. 

series  of  letters  comparing  the  relative  progress  of  English 
trade  at  different  dates  during  the  last  two  centuries,  in 
which  not  the  slightest  reference  was  made  to  the  fact  that 
we  have  no  good  statistics  of  aggregate  imports  before  1854, 
and  no  declared  values  of  exports  before  1820,  so  that  all 
comparisons  before  these  dates,  or  between  facts  before  and 
facts  after  these  dates,  are  most  difficult.  The  true  study  of 
statistics  of  course  shows  the  necessary  limitations  of  any 
such  comparisons.  I  do  not  say  it  would  be  quite  impossible 
to  go  back  farther  to  some  good  purpose.  It  is  quite  likely 
that  a  careful  student,  with  a  good  record  of  prices  in  his 
hand,  willing  to  take  the  trouble  to  compare  this  record  with 
the  official  valuations  from  time  to  time,  and  to  attend  to  the 
relative  magnitude  of  the  chief  articles  of  trade,  might  arrive 
at  results  which  would  throw  a  sjreat  deal  of  lisjlit  on  the 
economic  history  of  the  last  two  centuries.  But  for  the 
present  the  confused  notion  that  our  recent  progress  under 
free  trade  has  been  less  than  in  former  periods  before  free 
trade,  which  was  the  conclusion  or  apparent  conclusion  of 
the  remarkable  letters  I  have  referred  to,  must  be  dismissed 
as  a  mere  wild  notion  which  cannot  be  known  to  have  any 
relation  to  actual  facts.  The  range  of  our  genuine  knowledge 
in  these  matters  is  much  more  limited  than  such  discussions 
assume. 

Another  illustration  of  how  true  ideas  may  be  substituted 
for  false,  is  supplied  by  the  discussion  in  Sir  T.  Farrer's  recent 
pamphlet  issued  by  the  Cobden  Club,  on  "  Free  Trade  v.  Fair 
Trade."  A  great  deal  of  this  pamphlet  is  taken  up  with  the 
refutation  of  the  idea  that  our  trade  with  the  colonies  is 
specially  beneficial,  or  tends  to  increase  more  than  our  trade 
with  foreign  countries.  For  myself,  I  cannot  see  how  the 
idea  which  Sir  T.  Farrer  refutes  tends  to  support  the  pro- 
tectionist argument.     It  rather  seems  to  prove  that  as  the 


THE    USE    OF    IMPOUT    AND    EXPORT    STATISTICS.  235 

colonies  are  less  protectionist  than   foreign  countries,  their 
reLative  free  trade  is  only  a  sign  that  if  they  were  more  free 
trading  the  better  for  ns.     Bnt  Sir  T.  Farrer's  demonstration 
that  there  are  "colonies,"  and  "colonies,"  and  that  there 
have  been  great  fluctuations  in  the  amount  of  trade  and  its 
proportion  to  our  whole  trade  which  we  have  done  with 
them  in  different  periods,  is  conclusive  as  to   there   being 
nothing  in  the  protectionist  notion  of  the  special  value  of 
colonial  trade.     Perhaps  I  may  add  that  a  reference  to  one  of 
the  tables  which  I  have    given  to  you  to-night,  viz.,  that 
showing  the  issues  of  public  loans  and  companies  on  the 
London  Stock  Exchange  on  foreign  account  in  the  last  six 
years,  throws  some  light  on  the  momentarily  greater  develop- 
ment of  our  trade  with  the  colonies  as  compared  with  our 
trade  with  foreign  countries.      This  list  comprises  a  very 
large  proportion  of  colonial  issues,  a  much  larger  proportion 
than  the  previous  six  years,  before  the  foreign  loans'  collapse, 
would  have  shown.     The  tiuth  is,  I  should  say,  our  exports 
to  the  colonies  lately  have  ke])t  on  increasing  because  their 
credit  was  never  impaired,  while  our  exports  to  many  foreign 
countries  fell  off  because  we  ceased  to  lend  to  them.     At  any 
rate  the  point  seems  worth    investigating    before    drawing 
absolute  conclusions. 

Yet  one  more  remark  on  lliis  head.  Sir  T.  Farrer  shows 
conclusively  enough  that  colonies  are  of  different  sorts,  and 
they  are  not  to  be  grouped  together,  nor  are  all  foreign 
c(nintries  to  be  grouped  together.  This  reminds  me  of  a 
different  grouping  of  countries,  which  some  of  you  may 
remember,  by  a  gentleman,  Mr.  Ernest  Seyd,  who  was  one  of 
us,  and  for  whom  we  all  had  the  highest  respect,  though  few 
of  us  agreed  with  his  conclusions  or  methods.  ^Mr.  Seyd 
grouped  countries  into  those  having  the  gold  standard,  and 
those  having  the  silver  standard,  and  found,  or  believed  he 


23 G  THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS. 

had  found,  that  it  was  with  countries  having  the  gold 
standard  our  trade  had  progressed  most,  while  with  countries 
having  the  silver  standard  it  had  tended  to  decline.  I  do  not 
know  whether  if  ]\Ir.  Seyd  had  lived  and  observed  the  very 
last  advance  in  the  trade  with  India  he  would  have  adhered 
to  his  view,  but  his  division  was  at  least  quite  as  logical  as 
the  division  into  colonies  and  foreign  countries  which  has 
lately  been  made. 

The  conclusion  is  that  such  rough  groupings  and  the  facts 
apparently  shown  are  not  to  be  relied  upon,  and  do  not  yield 
true  ideas  in  a  statistical  view.  The  inquirer  in  this  as  in 
other  matters  must  try  many  methods,  and  must  not  conclude 
that  the  apparent  look  of  the  figures  corresponds  to  facts.  A 
true  history  of  the  recent  course  of  the  foreign  trade  of  the 
principal  nations  of  the  world,  would  lay  stress  upon  many 
things  besides  the  division  of  nations  into  British  colonies 
and  foreign  countries,  or  into  gold  standard  and  silver 
standard  countries.  The  progress  of  invention  ;  the  growth  of 
shipping  in  one  country,  and  its  decline  in  another ;  the 
settlement  of  new  countries,  and  the  like  facts,  would  all 
have  a  place,  and  perhaps  a  larger  place,  than  the  points 
which  protectionists  and  fair  traders,  or  enthusiasts  like 
Mr.  Seyd,  who  concentrate  their  attention  on  one  subject 
only,  take  up.  I  need  not,  however,  multiply  illustrations, 
especially  as  the  whole  course  of  the  argument  to-night  has 
been  to  substitute,  as  I  hope,  true  ideas  for  false  ones,  on 
many  points. 

In  various  ways,  then,  we  conclude  that  a  use  can  be  made 
of  statistics  of  imports  and  exports  in  the  discussion  between 
free  traders  and  protectionists.  The  fact  that  such  statistics 
cannot  be  used  in  the  direct  argument  as  to  which  regime  is 
most  favourable  to  material  progress,  is  against  the  protec- 
tionist, who  calls  for  Government  interference,  and  must  thus 


THE    USE    OF    IMPORT    AND    EXPORT    STATISTICS.  237 

prove  his  case,  wliile  the  free  trader  is  passive.  The  statistics 
at  the  same  time  supply  ample  proof  j9rma/«a'c  that  there 
is  nothing  in  the  apparent  figures  of  imports  and  exports  to 
supply  a  case  against  free  trade.  Next,  they  can  also  be 
used  to  prove  that  at  the  period  of  transition  from  one  regime 
to  another,  the  tendency  of  free  trade  measures  is  to  add  to 
the  prosperity  of  a  country,  while  no  such  tendency  can  be 
proved  of  protectionist  measures.  Finally,  they-  help  to 
prove  the  utter  confusion  of  ideas  which  is  fovmd  to  be  the 
most  fitting  soil  for  the  growth  of  the  protectionist  idea  itself. 
Without  then  making  more  of  statistics  than  can  really  be 
made  of  them,  we  can  affirm  that  they  are  most  useful  in 
these  controversies.  They  are,  however,  useful  in  proportion 
only  as  we  observe  their  necessary  limitations.  If  the 
example  of  protectionists  is  imitated  by  free  traders,  and  the 
first  figures  that  come  to  hand  are  shied  at  opponents  on  the 
principle  that  any  stick  is  good  enough  to  beat  a  dog  with,  I 
am  not  sure  that  figures  will  help  the  free  trader  much.  Tlie 
public  will  simply  be  puzzled,  and  induced  more  than  ever  to 
believe  that  there  is  nothincc  at  all  in  statistics. 


IX.~CONCL  USION. 

I  HAVE  now  to  return  to  the  point  from  which  I  started. 
]\Iy  complaint  at  the  beginning  was  of  the  wrong  use  of 
statistics,  and  the  neglect  of  the  conditions  upon  which  alone 
they  can  be  rightly  used.  If  I  have  made  out  a  case  at  all, 
it  is  that  even  import  and  export  figures,  which  are  so 
familiar  to  many,  cannot  be  handled  with  facility ;  that  there 
is  a  world  of  knowledge  to  be  learnt  concerning  them  ;  and 
that  in  all  directions  sound  and  diligent  study  must  precede 


238  THE    USE    OF   IMPORT    AND    EXrOET   STATISTICS. 

any  good  use  of  them ;  but  that  if  there  is  such  a  study  of 
statistics,  useful  and  vahiahle  conchisions  can  he  arrived  at 
with  certainty.     My  suggestion,  then,  would  be  that  there  is 
need,  not  only  for  the  members  of  this  Society  to  redouble 
their  exertions  in    the  way  of  diffusing   a    knowledge    of 
statistical  methods,  but  for  some  improvements  in  our  system 
of  education,  in  which  there  is  hardly  any  visible  place  given 
to  statistics.     There  are  many  chairs  of  political  economy  in 
this  country,  but  no  chair  of  statistics  that  I  know  of,  and 
very  few,  if  any,  of  the  political  economy  chairs,  where  the 
teaching  of  statistics  forms  part  of  the  course.     Some  remedy 
surely  ought  to  be  applied  to  this  defect.     As  regards  political 
economy,  it  is  quite  certain  that  any  study  of  that  science  in 
its  applications  is  impossible  witliout  statistics.     A  theoretical 
teacher  may  trace  out  tendencies  or  forces  on  paper,  but  in 
the  real  world  quantities  must  be  dealt  with ;  and  in  the 
measurement  of  tendencies  or  forces  statistics  are  absolutely 
needed.     It  is  easy  to  prove  theoretically,  for  instance,  that  a 
protectionist  tariff  does  harm,  but  it  is  a  different  thing  in 
the  real  world  to  give  any  notion  of  how  much  harm  is  done, 
and  when  the  protection  is  slight  in  proportion  to  the  whole 
business  of  a  country  to  measure  the  effect  at  all.     How  to 
deal  with  such  questions  is  the  problem  for  the  economist 
who  is  also  a  statistician,  and  they  are  much  more  difficult 
and  complex  than  those  belonging  to  theoretical  or  deductive 
political  economy.     The  time  has  come  then,  it  seems  to  me, 
when  the  public  have  a  right  to  expect  that  in  our  universities 
statistics  should  have  some    recognised    place    as    well    as 
political  economy.     If  the  facts  of  the  business  world,  as  it  is 
constituted  at  present,  were  taught  statistically,  and  some 
notion  given  of  the  sources  of  information  and  of  how  they 
could  be  rightly  used,  nuicli  of  the  recent  discussion  between 
free  traders  and  protectionists  would  probably  have  been 


THE    USE    OF   nirORT    AND    EXPORT    STATISTICS.  230 

saved:  most  eilucated  hk'U  woiilil  liave  seen  at  once  wlu-ii 
propositions  were  stated  wliicli  were  incapable  of  statistical 
proof,  and  when  figures  were  used  without  any  study  (jr 
appreciation  of  the  facts  underlying  them.  Tlie  protectionist 
or  lair  trader  would  have  been  summarily  laughed  out  of 
court,  instead  of  being  supposed  for  a  time  to  liave  liad  so 
much  of  a  case  that  party  politicians  on  one  side  thought  fit 
to  give  him  some  encouragement,  and  party  politicians  on 
the  other  side  were  a  little  apprehensive  of  the  result.  The 
study  of  statistics  should  undoubtedly  form  a  necessary  part 
of  liberal  education,  especially  of  those  who  aspire  to  be 
politicians  or  public  men. 


YII. 

rOEEIGN    MANUFACTUEES    AND     ENGLISH 
TEADE* 

L—INTBOD  VCTOR  Y. 

The  progress  of  invention  and  industry  creates  a  state  of 
things  throughout  the  world,  in  which,  as  I  believe,  an 
increase  of  manufacturing  in  foreign  countries  must  inevi- 
tably take  place.  The  wants  of  men  increasing  with  their 
resources,  the  proportion  of  people  engaged  in  agriculture 
and  mining  and  analogous  pursuits,  in  almost  every  country, 
is  destined  to  decline,  and  that  of  people  engaged  in  miscel- 
laneous industry — in  other  words,  in  manufactures,  using 
the  latter  phrase  in  a  wide  sense — to  increase.  The  question  I 
now  propose  to  discuss  is  whether  such  an  increase  of  industry 
in  foreign  countries  takes  place  under  conditions  which  are 
on  balance  favourable  or  unfavourable  to  English  trade  ?  I 
believe  the  answer  must  be  given  that  the  conditions  are 
favourable,  and  I  have  so  little  doubt  of  the  answer,  that 

*  This  Essay  was  first  published  in  the  beginning  of  1885,  in 
the  form  of  letters  to  the  '  Times,'  the  occasion  being  a  reference  to 
alleged  opinions  of  mine  which  was  made  by  Lord  Dunraven  in  the 
course  of  a  fair  trade  debate,  in  the  House  of  Lords  in  November  1884. 
Tlie  passage  in  my  previous  writing  which  Lord  Dunraven  mis- 
understood, will  be  found  in  the  Essay  on  "The  Liquidations  of 
1873-76,"  included  in  the  first  series  of  "  Essays  in  Finance." 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     241 

when  I  first  suggested  it  I  liardly  anticipated  its  1)oing 
questioned.  The  opinion,  however,  lias  been  a  "hard 
saying "  to  many,  who  have  some  vague  notion  apparently 
that  no  country  should  manufiicturc  but  England,  and  that 
to  suggest  an  increase  of  manufacturing  abroad  as  being 
possibly  the  result  of  conditions  which  are  good  and  not  bad 
for  English  trade,  is  something  wicked  and  monstrous.  To 
speak  of  foreign  manufactures  is  to  hold  up  to  such  people 
the  proverbial  red  rag.  But  the  question,  like  others  iii 
business,  must  of  course  be  looked  at  hardly  and  dispassion- 
ately.    We  must  not  ignore  facts. 

Now,  as  to  the  inevitability  of  the  process  is  there  any 
reasonable  doubt?     In  England,   at  least,  we  arc  familiar 
with  the  fact  that  for  generations  the  rural  population  has 
steadily  declined,  although  the  quantity  of  food  produced, 
allowing  for  changes  in  quality,  is  as  great  or  greater  than 
ever.     Similarly,  in  Prance  there  has  been  a  decrease  of  the 
rural  population  and  a  growth  of  the  population  in  towns. 
Even   in   the   United    States,    notwithstanding  the   special 
condition  of  a  vast  quantity  of  virgin  soil  in  that  country, 
the   proportion   of  the   town   population    for   the   last  two 
censuses  has  tended  to  increase.*      The  relative  diminution 
of  the  population  engaged  in  agriculture — and  similar  facts 
could  be  stated  as  to  agriculture  and  mining  together — is 
thus  a  fact  of  the  present  time  among  great  ci\'ilised  com- 
munities, whether  we  like  it  or  not.      That  it  is  a  aood  thin<T 
for  the  human  race  is,   however,  equally  certain  from  the 
economic  point  of  view.     Eewer  people  in  proportion  being 
needed  to  produce  food,  there  are  more  people  in  proportion 
to  engage  in  other  industries.     The  whole  production  of  an 
industrial  community  is  consequently  increased.     If  the  food 

*  See  postea,  p.  340. 
n.  n 


242     FOREIGN  MANUFACTUEES  AND  ENGLISH  TRADE. 

of  a  comiimnity  could  be  produced  by  a  tenth  instead  of  by 
a  fifth,  or  a  larger  proportion  of  the  whole  number,  the  other 
things  desired  by  human  beings  would  be  increased  by  the 
labour  of  so  many  more  hands. 

In  point  of  fact,  the  increase  of  wealth  in  modern  times  is 
probably  greater  than  what  is  indicated  by  the  mere  decline 
in  the  proportion  of  the  agricultural  population.  The  whole 
populations  in  question  are  better  fed  than  they  formerly 
were,  instead  of  being  fed  as  well.-  The  relatively  diminished 
agricultural  population  is  thus  producing  more  than  it  would 
appear  to  be  doing  from  a  mere  comparison  of  the  changes 
in  its  numbers  on  the  assumption  that  the  whole  population 
supplied  by  it  is  living  no  better  than  it  did. 

Of  course  it  may  be  said  that  although  the  proportion  of 
the  rural  population  tends  to  diminish,  it  does  not  follow 
that  the  relative  increase  of  manufacturing  population  or  of 
population  engaged  in  other  industries  should  be  an  increase 
of  such  population  abroad.  It  seems  to  be  considered  that 
the  only  tolerable  condition  of  tilings  would  be  an  increase  of 
the  English  manufacturing  population,  Tliis  would  mean, 
however,  an  inconcei^'able  increase  of  the  town  population  of 
England,  wliich  has  already  increased  in  a  most  marvellous 
manner.  If  manufacturing  were  to  increase  in  no  country 
but  England,  then  the  population  of  foreign  cities  like  Paris, 
Kouen,  Liege,  Boston,  Chicago,  and  many  more  cities  must 
largely  have  come  to  England,  involving  a  displacement  of 
population  without  example  in  liistory.  IMiscellaneous  in- 
dustries, however,  must  in  the  nature  of  things  be  local.  Dress- 
making and  tailoring,  for  instance ;  house  building,  and  to  some 
extent  furniture  making ;  railway  and  road  making,  and  other 
industries — must  all  in  the  nature  of  tilings  be  local,  so  that 
an  agricultural  population  necessarily  attracts  a  miscellaneous 
population.     So  much  being  local,  even  industries  which  are 


FOREIGN  MAXUFACTURES  AND  ENGLISH  TRADE.     243 

specifically  known  as  manufactures,  as  tliey  are  on  so  lari,'e  a 
scale  as  to  be  in  factories,  tend  to  be  local  too.  It  is  thus  quite 
inconceivable  that  a  relative  diminution  of  the  rural  popula- 
tion of  any  country  should  lead  to  an  export  of  population  to 
a  single  country  which  is  to  do  all  the  manufacturing.  Apart 
from  obstacles  of  a  non-economic  kind  to  such  a  transfer  of 
population,  we  must  expect,  on  economic  grounds  alone,  that 
the  tendencies  favouring  the  relative  diminution  of  rural 
population  generally  should  lead  to  a  relative  diminution  in 
each  particular  foreign  country — i.e.,  to  a  relative  increase  in 
the  non-agricultural  population  of  that  country,  including 
the  population  engaged  in  "  manufactures." 

So  much  for  the  inevitability  of  the  condition  that  foreign 
manufactures  should  increase.  Coming  to  the  question  as  to 
whether  Ensrland  jjains  or  not,  the  same  answer  must  be 
given  both  theoretically  and  practically. 

Theoretically,  we  have  to  consider  different  cases.  In  the 
first  case  of  all  there  can  be  no  doubt.  Suppose  a  community, 
with  its  rural  population  relatively  diminishing,  should 
employ  its  surplus  hands  in  "  manufoctures  "  which  compete 
in  no  way  with  English  manufactures.  England's  gain 
■would  clearly  be  that  in  such  a  foreign  community  it  has  a 
richer  customer  than  before.  Some  of  the  "  manufactures  " 
might  be  exported  to  England,  but  the  object  would  be  to 
purchase  other  manufactures  of  English  make.  Or  some  of 
the  manufactures  might  be  exported  to  foreign  countries 
with  which  we  trade,  and  the  proceeds  of  the  sale  would  be 
employed  in  purchasing  English  manufactures.  On  the 
hypothesis  made,  English  ti-ade  could  in  no  way  suffer  injury. 

In  the  second  case,  suppose  a  foreign  community  with  a 
rural  population  relatively  diminishing  should  employ  its 
surplus  hands  in  making  for  itself  articles  which  it  lias 
hitherto  purchased  from  England.     In  this  case  England,  at 

li  2 


24-1     FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE. 

first  sight,  appears  to  he  damnified ;  and  the  particular 
English  manufacturers  who  lose  their  market  would  say  it  is 
wholly  damnified.  But  the  injury  is  only  at  first  sight,  and 
there  would  obviously  be  modifications  and  compensations. 
By  the  hypothesis  the  goods  hitherto  exported  to  purchase 
English  manufactures  would  continue  to  be  available  for 
export.  The  particular  English  manufactures  hitherto  bought 
would  no  longer  be  bought,  but  the  surplus  would  be  used  to 
buy  something  else  either  in  England  or  elsewhere  ;  and  if  not 
in  England,  then  the  country  from  which  additional  purchases 
were  made  would,  in  turn,  have  a  surplus,  so  that  in  the  end 
the  demand  would  tend  to  come  upon  England  as  the  pre- 
dominant manufacturing  country.  Follow  the  matter  out  as 
we  may,  the  original  demand  of  the  country  which  now 
manufactures  something  it  formerly  bought  from  England 
would  be  found  to  remain  in  the  world's  markets  ;  and,  as  I 
contend,  would  in  the  long  run  benefit  England.  Meanwhile 
the  exact  loss  to  England  of  the  cessation  of  the  original 
direct  demand  must  not  be  exaggerated.  At  the  worst  there 
would  only  be  a  displacement  of  manufacture — not  a  matter 
to  be  much  considered,  as  these  changes  in  the  course  of 
trade  are  always  slow ;  but  there  need  not  even  be  displace- 
ment in  actual  fact,  a  change  of  demand  from  one  country 
being  often  and  usually  accompanied  by  compensating 
changes  in  the  demand  from  other  quarters. 

At  the  worst,  suppose  there  should  be  no  compensating 
demand  from  al)road,  wliicli  is  inconceivable,  the  maxinuLin 
loss  to  England  would  Ijc  the  extra  profit  on  the  particular 
foreign  trade  which  in  any  given  case  is  displaced  and  forced 
into  some  other  trade,  as  compared  with  the  profit  in  that 
other  trade.  Such  a  loss  must,  of  course,  be  quite  inconsider- 
able in  the  general  question  of  the  losses  and  gains  of  so  vast 
a  trade  as  that  of  England. 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     245 

111  tlie  third  utse,  .su])posc  a  foreii^ii  coininiuiity  willi  its 
rural  population  relatively  diminishinL,'  should  employ  its 
surplus  hands  in  luakiun  articles  for  sale  iu  England  whidi 
compete  with  English  manufactures  at  home — the  case  most 
dreaded  of  all,  apparently,  by  fair-traders.  Clearly  in  this 
case  the  only  effect  of  the  foreign  demand  would  be  stimu- 
lating. Engli.sh  consumers  would  be  benefited  by  a  cheaper 
commodity,  just  as  they  would  be  by  competition  springing 
up  at  home.  A  certain  part  of  the  capital  and  labour 
engaged  in  home  manufacturing  might  be  gradually  displaced  ; 
but  there  would  be  no  displacement  if  the  home  demand 
simultaneously  increased,  and  there  would  be  no  diminution 
of  employment  in  the  aggregate,  as  the  foreigner  selling 
articles  here  whieli  lie  did  not  sell  before,  must  buy  equivalent 
articles  in  return. 

A  fourth  case  would  l)e  where  the  new  manufactures  of  a 
foreign  country  competed  with  Englisli  manufactures  in  the 
markets  of  a  tliird  foreign  country.  Here  the  results  would 
in  no  wise  be  different  from  those  given  in  tlie  secoiul 
illustration.  For  present  purposes,  all  Icueign  countries 
together  may  be  regarded  as  one  foreign  country. 

Of  course,  in  actual  fact,  as  foreign  manufacturing  increases, 
the  above  cases  are  mixed.  To  some  extent,  as  their  rural 
population  relatively  diminishes,  foreign  countries  engage  in 
new  manufactures,  in  which  case  all  they  do  is  pure  gain  to 
others  as  well  as  to  themselves ;  to  some  extent  they  begin 
to  make  for  themselves  what  they  liave  hitherto  bought  from 
England,  in  which  case  it  is  English  capital  and  labour  which 
is  set  free  for  new  undertakings,  the  wealth  of  the  foreign 
community  iu  question  and  its  deniand  <in  tlie  markets  of 
the  world  generally  l)eing  all  tlie  while  increased;  and  finally 
foreign  countries,  to  some  extent,  compete  with  Englisli 
manufactures   at  home   or    abroad,   with  results,   however, 


24G     FOEEIGN  MANUFACTURES  AND  ENGLISH  TKADE. 

necessarily  much  the  same  as  in  the  second  case,  and  with 
the  full  advantage  to  the  English  consumer  of  cheapening  the- 
commodities  he  consumes. 

Tims  in  no  ^vay,  in  any  theoretical  case,  is  it  the  tendency 
of  the  relative  diminution  of  rural  population  in  foreign- 
countries  to  injure  English  trade.  At  the  same  time,  as  it 
is  implied  in  the  hypothesis  that  the  wealth  and  purchasing 
2)ower  of  foreign  countries  and  their  wants  also  increase,  then 
there  is  a  general  condition  favourable  to  English  trade 
produced.  England  as  a  manufacturing  country  jpar  ex- 
cellence can  only  gain  by  the  increased  purchasing  power  of 
others,  and  the  creation  among  them  of  innumeral)le  wants. 
Just  as  at  home  the  prosperity  of  Liverpool  is  no  bar  to  the 
prosperity  of  Newcastle,  so  the  prosperity  of  Paris  need  be 
no  bar  to  the  prosperity  of  London.  There  is  one  special 
industry,  shipping,  which  must  obviously  gain  by  the  increased 
wealth  of  foreign  countries  and  the  increased  movement  of 
foreign  industry  generally ;  and  so  interdependent  are  the 
various  kinds  of  manufacturing  that,  in  the  nature  of  things,- 
there  must  be  numerous  other  English  industries  in  a  like 
position. 

The  practical  proof  that  the  condition  of  things  described 
is  not  unfavourable  to  English  trade  is  to  be  found  in  the 
history  of  the  present  century.  During  all  that  time,  foreign 
manufacturing  and  foreign  competition  have  been  constantly 
increasing.  Our  own  unfortunate  protectionist  policy  before 
1843,  while  impoverishing  ourselves,  tended  to  stimulate 
manufacturing  abroad  in  a  way  which  deprived  us  of  the 
benefit  we  should  have  had  from  an  increase  of  foreign  manu- 
facturing under  natural  conditions ;  but  apart  from  that 
special  stinndus,  the  natural  conditions  have  obviously 
caused  a  large  increase  in  foreign  manufacturing.  But  all 
the  while  there  has  been  no  such  increase  of   manufocturing.       _ 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     247 

or  of  exports  of  "  iiuinufiictures"  \)qt  head  of  the  population 
as  there  has  been  in  England ;  and  this  relative  growth  has 
continuetl  unchanged  to  the  present  day. 

Theory  and  practice  are  thus  at  one  as  to  the  benefit  whicli 
English  trade  derives  from  the  general  conditions  of  industry  ^ 
under  which  foreign  manufactures  increase.  ■  The  practice  is 
so  important,  and  the  facts  are  so  interesting  and  instructive, 
that  it  will  be  my  principal  object  in  the  remainder  of  this 
essay  to  examine  them. 


II.— ENGLAND'S  EEL  ATI  VU  PROSPERITY. 

Has  England  prospered  while  the  miscellaneous  industry  of 
foreign  countries  has  been  increasing  ?  Has  it  prospered  as 
much  as  or  more  than  other  great  nations  ?  Have  the 
chan<Tes   of  the   course  of  trade  which  have  occurred  been 

O 

accompanied  by  indications  that  what  England  loses,  or 
appears  to  lose,  in  one  direction  is  made  up  by  a  gain  in 
another  direction  ? 

These  questions  must  all  be  answered  in  the  affirmative. 
As  to  English  prosperity  until  now,  looking  at  the  matter 
broadly,  there  can  surely  be  no  question.  As  the  matter, 
indeed,  has  been  thrashed  out  again  and  again,  I  need  only 
indicate  in  the  briefest  manner,  the  outline  of  the  argument. 
The  very  increase  of  population  is  a  proof  of  prosperity.  From 
IG  millions  at  the  beginning  of  the  century  we  liave  grown 
to  be  a  people  of  3G  millions.  Leaving  Ireland  out  of  account, 
as  having  existed  under  si)ecial  conditions,  we  have  grown  in 
CJreat  Britain  in  the  same  period  from  10'\  millions  to  31 
millions.  In  about  eighty  years  the  population  has  trebled. 
Population,  as  a  rule,  would  not  increase  without  an  increase 
of  the  means  of  subsistence.     In  the  very  increase  of  popula- 


248     FOREIGN  MANUFACTUEES  AND  ENGLISH  TRADE. 

tion  for  many  years  past,  therefore,  that  increase  having 
been  one  of  people  engaged  in  miscellaneous  industry,  we 
have  a  proof  tliat  the  conditions  of  trade  throughout  the 
world,  whicli  involve  a  large  increase  of  miscellaneous 
industry  elsewhere  than  in  England,  have  not  on  the  whole 
been  unfavourable  to  us.  AVe  might  have  been  more  pros- 
perous under  some  ideal  conditions  ;  but  have  we  not  been 
fairly  prosperous  ? 

In  point  of  fact,  there  has  not  only  been  an  increase  of 
population,  an  enormous  increase,  but  this  increased  popula- 
tion exists  in  greater  average  comfort  than  any  smaller  popu- 
lation existing  at  any  former  period  on  British  soU.  I  may 
refer  to  my  address  in  1883  *  to  the  Statistical  Society  as 
containing  the  substance  of  wliat  I  should  have  to  say  on 
this  subject.  In  increased  money  wages,  in  cheaper  food 
and  clothing,  in  larger  command  over  the  luxuries  of  life, 
the  masses  of  the  United  Kingdom,  besides  having  become 
far  more  numerous  than  they  were,  have  made  an  enormous 
advance  upon  their  condition  half  a  century  ago.  There  is 
still  a  large  criminal  and  pauper  population  in  our  midst,  and 
there  is  still  a  large  mass  of  the  very  poor  just  above  the  borders 
of  pauperism  ;  but  the  proportions  of  both  these  classes  to 
the  whole  community  are  smaller  than  they  ever  were  before. 

Having  discussed  the  subject  so  recently,  and  as  I  am 
only  giving  an  outline  of  the  argument,  it  would  be  out  of 
place  for  me  to  enter  now  into  more  detailed  proof;  but  I 
may  be  allowed  a  remark  on  the  kind  of  contradiction  that  is 
sometimes  given  to  such  statements.  A  certain  class  of 
humanitarians  and  socialists  assume  constantly  that  the 
poor  are  increasing,  and  that  the  "  masses  "  are  worse  off  than 

*  Noveml)er,  1883.  "  The  Trogress  of  the  Working  Classes  in  the 
last  Ilalf-century."  This  address  is  included  in  the  present  series. 
See  p.  3G5,  jyostea.    See  also  "  Further  Notes,"  p.  4.09. 


FOREIGN  MANUFACTURES  AND  ENGLISU  TRADE.     249 

ever.  At  a  time  of  tlcprcssiou  like  the  ])reseut  every  instance 
of  diminution  of  employment  in  a  particular  trade  is  pointed 
to  as  if  it  were  part  of  a  general  stoppage  of  industry  that  had 
begun,  without  any  attention  to  the  fact  of  the  well-known 
oscillations  to  which  industry  is  subject,  or  the  still  more 
important  fact  that,  calamitous  as  they  still  are,  the  oscilla- 
tions in  recent  times  are  less  than  they  used  to  be,  and  less 
calamitous  on  the  whole  in  their  effects  on  the  working 
classes.  But,  because  certain  people  will  not  look  at  the 
facts,  the  facts  themselves  are  none  the  fess  certain.  The 
numbers  of  paupers  and  amounts  paid  for  poor  relief  have 
for  many  years  been  carefully  ascertained ;  various  records 
of  money  wages  also  exist ;  the  prices  of  principal  articles, 
such  as  wheat  and  sugar,  are  also  exactly  known ;  the 
increase  or  decrease  of  different  classes  of  people,  the  average 
consumption  of  leading  articles  of  luxury  and  necessity,  the 
rate  of  mortality  of  tlie  ])opulation  for  several  generations, 
are  things  that  arc  also  well-known  or  ascertainable;  so  tliat 
tliere  can  be  no  real  doubt  of  the  broad  conclusion  to  which  all 
the  facts  point.  If  there  is  any  deterioration  of  the  people 
of  England  from  a  height  of  prosperity  arrived  at  in  any 
previous  period,  we  must  be  only  at  the  very  beginning  of  it. 
There  is  no  deterioration  which  has  yet  liad  any  effect  on  the 
statistical  signs  that  would  disclose  it. 

The  question  then  arises — Is  there  any  other  large  commu- 
nity which  has  made  greater  prognress  ?  The  only  one  which 
can  be  referred  to  is,  of  course,  the  United  States.  In  the 
United  States,  however,  there  is  no  similarity  in  the  con- 
ditions to  those  of  England,  everything  being  altered  there 
by  the  vast  abundance  of  new  and  fertile  land.  The  increase 
of  po])ulation  in  tlie  United  States,  in  consequence  of  that 
abundant  new  land,  lias  been  much  larger  than  it  has  been 
in  England.     There  has  been  equally  remarkable  progress  in 


250     FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE. 

our  Australian  colonies.  But  take  the  old  countries.  Li 
European  countries  the  increase  of  population  has  been  in  no 
case  at  a  greater  rate  than  in  Great  Britain.  In  France, 
which  is  most  like  England  in  many  conditions,  the  growth 
has  been  very  slow  indeed.  In  Denmark,  Norway,  Sweden, 
Holland,  Belgium,  Spain,  and  Portugal  the  increase  on  the 
whole  has  also  been  slower  than  in  England.  In  Austria- 
Hungary  the  increase  has  been  very  slow,  though  rather  more 
than  in  France.  In  Italy,  Germany,  and  Paissia  there  has 
been  an  increase  more  resembling  that  of  England.  In 
Eussia,  however,  this  arises  from  the  conditions  having  more 
resembled  those  of  the  United  States  than  those  of  England, 
a  vast  expanse  of  virgin  soil  having  been  available  for  the 
population.  In  Germany,  and  even  more  markedly  in  Italy, 
it  seems  a  little  doubtful  whether  the  increase  of  population 
has  been  so  largely  accompanied  as  it  has  been  in  England 
by  an  increase  of  comfort,  and  most  certainly  the  progress 
has  not  been  greater  than  in  England.  With  the  single  and 
doubtful  exceptions  of  Germany  and  Italy,  however,  it  may 
be  broadly  stated  that  the  increase  of  a  population  like 
that  of  England,  without  virgin  soil  to  expand  upon,  is 
aljsolutely  unique  in  history.  No  old  country  has  progressed 
in  a  similar  manner. 

On  the  broadest  grounds,  therefore,  there  is  reason  for 
affirming  that  the  conditions  of  trade  throughout  the  world 
for  many  years  past  have  been  consistent  with  a  wonderful 
degree  of  prosperity  in  England.  Not  only  have  we 
prospered  absolutely,  but  a  comparison  with  other  countries 
under  similar  conditions  proves  that  we  have  prospered 
relatively.  We  have  done  well,  and,  as  things  go,  we  could 
not  have  done  better.  Under  some  ideal  conditions  we  might, 
perhaps,  have  done  better,  but  in  a  practical  discussion  we  can 
only  take  things  as  they  are^ 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     2")! 

The  proof  miglit  slop  at  this  point.  So  kng  as  wc  arc. 
prosperous,  it  cannot  matter  very  nmcli  liow  the  prosperity 
arises.  Whether  it  is  home  or  foreign  trade  that  is  the  causu 
of  prosperity  is  all  one,  so  long  as  ihe  general  result  is 
satisfactory.  In  a  comparison  with  other  nations,  however, 
especial  importance  appears  to  be  attached  to  the  foreign 
trade.  That  trade  is  sometimes  spoken  of  as  if  it  were  all 
the  trade  of  the  countries  referred  to.  But,  tried  by  the  test 
of  the  foi-eign  trade  only,  the  results  are  equally  favourable 
to  England.  In  no  country  in  the  world  has  the  foreign 
trade  progressed  so  much. 

The  figures  are  sometimes  disputed,  but  they  are  really 
beyond  dispute.  At  the  present  moment  the  foreign  trade  of 
England — imports  and  exports  together,  including  the  transit 
trade — is  in  round  figures  £750,000,000  per  annum,  about 
£20  per  head  of  the  population.  In  France  the  corresponding 
figures  are  £429,000,000  and  £12  per  head ;  in  the  United 
States,  £306,000,000  and  £G  per  head;  in  Germany, 
£488,000,000  and  £11  per  head;  in  Eussia,  £100,000,000 
and  £1  10s.  per  head  ;  in  Austria-Hungary,  £143,000,000 
and  £3  10s.  per  head ;  in  Italy,  £100,000,000  and  £3  10.9. 
per  head ;  and  so  of  other  nations.  It  might  be  possible  to 
find  out  some  one  small  country,  such  as  Belgium,  where  the 
total  per  head  is  more  than  in  the  United  Kingdom ;  but  in 
the  absolute  amount  of  the  foreign  trade,  and  in  the  amount 
per  head  among  all  tlio  important  nations  of  the  world,  we 
are  without  a  rival.  Tliere  is  hardly  a  nation  wliich  comes 
so  near  us  that  it  can  be  saitl  to  occupy  a  second  place  where 
we  occupy  the  first. 

The  parallel  does  not  end  here.  The  above  figures  take 
no  account  of  shipping,  an  important  element  in  the  foreign 
trade.  Here  tlie  coni]tarison  is  notoriously  still  more  favour- 
aide  to  England.     Out  of  l\\   niilliun  tons  uf  ocean-going 


252     FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE. 

sailing  tonnage  belonging  to  the  different  nations  of  the 
world,  in  the  latest  year  available  for  comparison,  no  fewer 
than  3^  million  tons,  or  30  per  cent.,  are  English ;  out  of  4^ 
million  tons  of  steam  tonnage,  the  more  important  branch  of 
the  business,  no  fewer  than  3^  million  tons,  or  over  70  per 
cent.,  are  English.  (I  speak  here  of  the  United  Kingdom 
only,  and  compare  it  with  the  rest  of  the  world,  including 
British  possessions.)  To  put  the  matter  another  way,  England 
has  100,000  tons  of  ocean-going  steam  sliipping  for  every 
million  of  the  population ;  the  United  States  3,000  tons 
only;  France  11,000  tons  only;  Germany  7,000  tons  only ; 
and  so  of  other  nations. 

Thus,  whether  we  take  foreign  trade  in  the  limited  sense 
of  imports  and  exports  only,  or  whether  we  include  shipping, 
the  predominance  of  England, at  the  present  time  is  beyond 
all  question.  Unless  we  are  very  slack  indeed,  it  must  take 
many  years  before  any  other  nation  can  come  up  to  us  in 
absolute  amounts,  and  still  longer  before  they  can  approach 
us  in  the  amounts  per  head. 

The  same  conclusion  is  arrived  at  when  progress  in  recent 
years  is  considered.  Xot  only  is  England  predominant  now, 
but  nowhere  has  such  progress  been  made.  Having  dealt 
with  the  subject  at  some  length  in  a  paper  I  read  in  1882  to 
the  Statistical  Society,*  I  may  be  allowed  to  refer  to  that 
paper,  only  stating  here  some  of  the  salient  points.  Thus  in 
England,  as  regards  imports,  going  back  as  far  as  we  can, 
which  is  to  185-4  only,  we  find  that  since  that  date  there  has 
been  an  increase  from  £143,-500,000  to  £411,000,000,  or 
very  nearly  200  per  cent.,  the  amount  of  the  increase  being 
£268,000,000,  In  the  United  States  the  imports  are  found 
to    be    still    little  more   now  than    they  were   in    England 

*  Sec  svpru,  pp.  132-239. 


rOEEIGN   MANUFACTURES   AND    ENGLISH   TRADE.  2')0 

in  1854,  being  only  £152,000,000,  and  the  increase  from 
1850  has  been  £110,000,000  only,  against  an  increase  of 
£268,000,000  in  England  in  the  same  period.  If  we  were  to 
go  back  for  a  shorter  period  of  years  we  should  still  find  the 
amount  of  the  increase  in  a  given  period  larger  in  England 
than  in  the  United  States.  Similarly  comparing  France  with 
England,  it  is  found  that  in  1880  the  imports  in  France  are 
far  below  those  of  England,  being  £245,000,000  only,  as 
compared  with  £411,000,000,  while  the  increase  since  1850  has 
been  £200,000,000  only,  as  compared  with  £268,000,000  in 
England  since  1854.  Unfortunately  the  German  foreign 
trade  statistics  do  not  begm  till  1872,  but  it  appears  that  the 
total  of  German  imports  is  about  £240,000,000  only,  as 
compared  with  the  much  larger  figure  in  England,  while  the 
increase  in  ten  years  has  been  about  £20,000,000  only,  as 
compared  with  about  £60,000,000  in  the  United  Kingdom  in 
the  last  ten  years.  It  would  be  useless  to  follow  out  the  com- 
parison with  other  countries  whose  foreign  trade  is  still  smaller 
than  that  of  England.  Nowhere  is  there  an  increase  in  amount 
to  be  compared  with  our  own. 

It  is  the  same  with  the  exports.  The  increase  in  the  case 
of  England  of  the  exports  of  domestic  produce  since  1840  has 
been  from  about  £50,000,000  to  £240,000,000,  an  increase  of 
£190,000,000  ;  in  the  United  States  in  the  same  period  it  has 
been  from  about  £26,000,000  to  £170,000,000  (the  exports  of 
the  United  States  were  actually  £20,000,000  less  in  1883), 
or  £144,000,000— the  total  exports  of  the  United  States  at 
the  present  time  being  thus  less  than  the  increase  in  the 
exports  from  England  since  1840 ;  in  France  in  the  same 
period  the  increase  is  from  £43,000,000  to  £140,000,000,  or 
about  £100,000,000  ;  and  so  of  other  nations.  In  amount  of 
increase  there  is  no  nation  to  be  compared  witli  England. 
As  regards  Germany,  where  we  can  only  go  back  to  1872, 


254     FOKEIGN  MANUFACTURES  AND  ENGLISH  TRADE, 

the  amount  of  the  domestic  exports  is  still  only  about 
£160,000,000  per  annum,  or  less  than  the  total  increase  in 
the  United  Kingdom  in  the  last  forty  years.  If  the  German 
figures  are  to  be  relied  on,  an  exceptionally  large  increase 
would  seem  to  have  occurred  since  1872,  but  the  whole 
system  of  recording  the  foreign  trade  in  Germany  is  perhaps 
as  yet  too  novel  to  make  comparison  for  so  short  a  period 
altogether  trustworthy.* 

Then,  in  regard  to  shipping,  English  progress  has  been 
even  more  remarkable.  Forty  years  ago,  according  to  the  best 
estimate  I  can  make,  we  were  owners  of  about  one-third  only 
of  the  world's  ocean-going  shipping.  Now  we  own  practically 
more  than  half,  and  of  steamers  alone  we  own  70  per  cent. 

The  figures  being  thus  quite  clear,  the  wonder  is  they  are 
disputed.  It  may  be  interesting,  therefore,  to  explain  how 
they  may  be  manipulated  so  as  to  present  an  appearance  of 
some  foreign  countries  gaining  ujion  us.  The  manipulation 
depends  entirely  upon  the  use  of  percentages.  The  increase 
in  United  States  exports  since  1840,  although  £144,000,000 
only,  as  compared  with  an  increase  of  £190,000,000  in 
England,  shows  an  increase  of  over  500  per  cent,,  as  compared 
with  380  per  cent,  iu  England.  See,  it  is  said,  how  much 
faster  the  United  States  is  moving  than  England.  All  the 
other  circumstances — our  greater  increase  in  amount,  the 
enormously  greater  magnitude  of  our  actual  trade,  the  much 
greater  increase  of  population  in  the  United  States — are 
overlooked.  But  to  act  in  this  way  is  necessarily  to  blunder 
statistically,  where  the  consideration  of  amounts  as  well  as 
percentages  is  always  material.  Tried  by  the  suggested 
test  of  percentage  of  increase  only,  it  would  probably  be 
found   that  no  country  has  progressed  so  much   in  recent 

*  See  my  evidence  before  the  Eoyal  Commission  on  Trade  Depres- 
sion for  a  farther  discussion  of  the  figures  of  German  exports. 


FOEEIGN   MANUFACTURES   AND    ENGLISH    TRADE. 


255 


years  in  its  foreign  trade  us  some  parts  of  Western 
Africa.  The  increase  from  zero,  oi-  all  but  zero,  to  an  api)rc- 
ciable  amount  of  trade  makes  an  enormous  change  in  the 
percentage ;  but  no  one  would  say  that  the  increase  of  the 
foreign  trade  of  Western  Africa  is  to  be  compared  with  such 
increases  of  trade  as  those  we  have  just  been  dealing  with. 

The  best  method  of  comparison,  perhaps,  is  to  take  the 
amounts  per  head  of  the  trade  at  different  times,  and  by  this 
method  the  predominance  of  England  stands  out  in  the 
clearest  manner.  I  extract  the  following  table  and  my 
comments  on  it  from  the  above  essay : — 

Imports  and  Exports  per  Head  of  the  Popitlation  in  England, 
France,  and  the  United  States  compaued. 


United 

United 

France. 

Kingdom. 

States. 

Imports : — 

£    s.     (/. 

£    s.     d. 

£    s.     d. 

1840 

I     5     2 

1850 

5    3    2* 

I    10     9 

15    0 

i860 

7    7    0 

261 

2  17    4 

1870 

9  14    4 

280 

3  15    8 

1880 

11  18    7 

309 

6  12    5 

Exports : — 

1840 

1  18    9 

I    II     I 

.. 

1850 

2  11  10 

I     6     2 

1    3  11 

i860 

4  14    7 

2  10  II 

2    9    2 

1870 

G    7  11 

2     611 

3    0    6 

1880 

G     9     5 

3     8     I 

3  15    2 

*  Year  1854. 
"  Thus  our  imports  per  head  are  still  about  four  times 
those  of  the  United  States  and  twice  those  of  France,  and 
our  exports  are  about  twice  those  of  either  country,  not 
counting,  what  I  must  always  insist  on,  our  invisible  exports. 
The  increase  of  our  imports  per  head  since  1850  is  also 
<loul)lc  the  whole  of  the  present  imports  per  head  into  the 
United  States,  and  about  ecpial  to  the  present  imports  per 


256     FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE. 

head  into  France,  and  the  increase  of  our  exports  since  the 
same  date  is  between  25  and  50  per  cent,  more  than  the 
total  exports  per  head  in  either  case." 

Since  the  above  was  written  the  changes  in  the  imports 
and  exports  would  make  no  substantial  difference  in  the 
result :  but  the  difference  would  be  to  the  advantaiiTe  of 
England. 

The  case  for  the  prosperity  of  England  under  the  condition 
of  an  increase  of  the  miscellaneous  industry  of  foreign 
countries  is  thus  strengthened  as  we  advance.  Not  only 
does  our  prosperity,  when  we  look  at  the  question  most 
generally,  appear  greater  than  that  of  any  foreign  country, 
but  when  we  look  specially  at  the  foreign  trade  which  is 
most  dwelt  upon  and  considered  by  those  who  harp  upon 
foreign  competition,  we  find  that  up  to  the  present  time  no 
country  has  advanced  as  we  have  done.  All  that  can  be 
said  to  the  contrary  is  that,  in  some  countries  having  small 
beginnings,  the  rate  of  advance  has  been  greater  for  a  certain 
period  than  with  us.  But  the  magnitude  of  the  rate  is 
clearly  connected  with  the  smallness  of  the  beginning. 
There  is  no  reason  to  believe  that  the  rate  of  advance,  when 
the  actual  amounts  have  become  larger,  will  continue  what 
it  has  been.  As  yet  the  advance  per  head  is  much  greater  in 
England  than  elsewhere. 


III.— OUR  SPECIAL  GAIN  FROM  FOREIGN 
MAN  UFA  CTURING. 

The  precise  character  of  our  prosperity  is  not  so  material  as 
the  prosperity  itself,  and  the  fact  of  advance  in  our  foreign 
trade,  if  an  increase  of  foreign  trade  is  the  kind  of  prosperity 


FOREIGN  MANUFACTUUES  AND  ENGLISH  TRADE.     257 

desired,  is  of  course  satisfactory,  whatever  may  have  been 
the  course  of  events  as  regards  particular  parts  of  that  trade. 
As  indicated,  however,  in  the  questions  with  which  I  began 
the  previous  part  of  this  essay,  our  foreign  trade  may  be 
looked  at  more  minutely  than  I  liave  yet  looked  at  it  for 
indications  as  to  the  way  it  has  been,  in  fact,  affected  Ijy 
that  increase  of  miscellaneous  industry  wliich  is  in  question. 
Does  the  increase  of  that  miscellaneous  industry  appear  to 
affect  our  foreign  trade  unfavourably,  or  are  there  any  si^ns 
that  our  own  improvement  is  largely  dependent  on,  and 
connected  with,  the  improvement  abroad  ? 

Up  to  a  certain  point  there  will  be  no  doubt  of  the  answer. 
The  material  increase  of  our  foreign  trade  for  many  years 
past  has  been,  as  regards  our  exports,  an  increase  in  the 
manufacture  and  export  of  "  other  things,"  such  as  I  have 
indicated  as  likely  to  arise  along  with  the  increase  of  manu- 
facturing in  foreign  countries.  My  contention  has  been  that 
whether  foreign  countries,  as  their  manufacturing  population 
increased,  took  to  manufactures  of  an  entirely  new  kind,  or 
took  to  making  articles  which  they  liad  hitherto  bought  from 
England,  or  took  to  making  articles  which  were  sent  to 
England  or  elsewhere  fur  sale  in  competition  with  English 
manufactures,  the  result  would  be  a  demand  on  England  for 
"  something  else."  This  phrase,  like  others  I  have  used  in 
the  controversy,  has  been  objected  to  as  hard,  and  I  have 
been  called  on  to  point  out  the  "  something  else."  But  the 
answer  is  in  the  history  itself.  Wliile  our  foreign  trade  has 
been  increasing,  as  we  have  seen,  to  a  degree  and  amount 
without  example  elsewhere,  the  increase  has  mainly  been  iu 
"  something  else."  I  have  before  me  at  this  moment  a  table 
showing  the  percentage  of  the  principal  enumerated  articles 
of  our  exports  to  tiie  total  exports  at  tlilferent  dates  since 
1840.     What  has  happened  is  most  instructive.     Our  cotton 

II.  S 


258  FOREIGN   MANUFACTITRES   AND    ENGLISH    TRADE. 

manufactures,  for  instance,  in  1840,  formed  about  33  per 
cent,  of  our  total  exports ;  about  1850  they  formed  rather 
less  than  30  per  cent. ;  in  1861  they  were  still  rather  under 
30  per  cent. ;  in  1870  the  proportion  had  fallen  to  27^  per 
cent. ;  in  1880  it  was  about  25^  per  cent,  only;  and  in  1883 
it  was  under  24  per  cent.  Linen  and  jute  manufactures, 
again,  which  were  about  6  per  cent,  of  our  exports  in  1840, 
were  only  about  3  per  cent,  of  our  exports  in  1883;  woollen 
and  worsted  manufactures,  which  were  about  10  per  cent,  of 
our  exports  in  1840,  were  only  about  7  per  cent,  of  our 
exports  in  1883.  In  all  these  cases  of  staple  manufactures, 
though  the  amounts  have  largely  increased  (for  we  exported 
£51,000,000  only  in  1840  against  £240,000,000  at  the 
present  time,  so  that  a  smaller  percentage  of  the  total  gives 
a  larger  amount  now  than  a  larger  percentage  of  a  smaller 
total  did  in  1840),  yet  the  rate  of  increase  has  been  slower 
than  in  the  case  of  our  exports  generally.  In  other  words, 
the  direction  of  trade  has  shifted  a  little.  It  is  the  "  some- 
thing else  "  which  foreign  countries  have  been  buying  more 
largely  from  us.  There  is  very  little  sign  indeed  of  any 
actual  diminution  in  their  purchases  of  staple  articles  from 
us  such  as  we  formerly  sold  abroad ;  what  we  are  dealing 
with  is  a  greater  proportionate  increase  of  their  purchases 
of  "  something  else."  Still  it  is  the  "  something  else  "  which 
bulks  more  and  more  largely  in  our  foreign  exports. 

To  some  extent  also  it  is  possible  to  show  what  the  new 
demands  upon  us  have  been.  In  1840,  for  instance,  our 
exports  of  coal  were  about  1  per  cent,  only  of  our  total 
exports.  In  1850  tliey  were  approaching  2  per  cent. ;  in 
1861  they  were  nearly  3  per  cent. ;  in  1870  about  the  same ; 
and  finally,  in  1883,  rather  over  4  per  cent. — an  ever-in- 
creasing percentage  of  a  larger  volume  of  trade.  Our  exports 
of  iron,   again,  in  its   dilfereut  forms,  exclusive  of  steam 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     259 

■engines  aud  niacliiuery,  constituted  in  1840  only  about  3 
per  cent,  of  our  foreign  exports;  in  1883  all  but  12  per 
cent.  Machinery,  M'liich  was  hardly  known  as  an  export  in 
1840,  the  wisdom  of  our  legislators  who  then  endeavoured 
to  protect  trade  prohibiting  almost  altogether  the  export  of 
machinery,  has  now  grown  to  l)e  5i  per  cent,  of  our  total 
•exports.*  Even  more  remarkable,  however,  has  Ijeen  the 
increase  of  that  miscellaneous  trade  which  can  hardly  be 
classified  at  all.  Anyone  who  looks  at  the  Statistical 
Abstract  will  iind  tliat,  in  spite  of  constant  endeavours  to 
keep  down  the  item  of  "  other  articles  "  which  remains  after 
all  the  principal  articles  are  enumerated,  the  bulk  of  this 
miscellaneous  item  is  always  increasing.  In  the  last  abstract 
issued  it  will  be  found  that  the  "  other  articles  "  in  18G9, 
at  the  beginning  of  the  fifteen  years'  period  embraced  in  it, 
amounted  to  £9,000,000,  or  not  quite  5  per  cent,  of  the 
total  exports  at  that  date,  amounting  to  £190,000,000.  In 
1883,  the  "other  articles"  amounted  to  £22,000,000,  or 
nearly  10  per  cent,  of  a  total  export  of  £240,000,000. 

The  remarkaljle  increase  of  our  foreign  trade  during  the 
last  forty  years  is  thus  mainly  due  in  fact  to  an  increase  of 
the  "something  else"  in  tliat  trade  wliieh  theory  would 
lead  us  to  expect  if  miscellaneous  industry  abroad  increases, 
but  which  it  is  impossible  beforehand  for  any  one  to  point 
out  specifically.  It  may  be  argued,  of  course,  that  our  trade 
would  have  been  greater  tlian  it  has  been  if  foreign  nations 
had  consented  to  be  hewers  of  wood  and  drawers  of  water  for 
us  ;  had  been  content  to  use  their  ever-increasing  population 
at  whatever  cost  in  the  old  ways;  and  had  bought  ever- 
increasing  quantities  of  the  products  of  the  previously 
•existing  English  manuftictures  which  they  had  been  in  the 

*  For  details  of  tlicso  figures,  .see  my  last  report  to  the  Board  of 
Trade  on  the  Prices  of  Imports  and  Exports,  C.  4106.    Scss.  1885,  p.  8. 

S  2 


260  FOREIGN    MANUFACTURES    AND    ENGLISH    TRADE. 

habit  of  purchasing.  P>ut,  of  course,  there  can  be  no  actual 
proof  of  such  an  argument,  whicli  appears,  moreover,  to  be 
exceedingly  dubious  in  itself,  as  we  do  not  know  that  foreign 
nations  would  have  bought  increasingly  from  us  at  all,  unless 
they  had  become  richer,  and  had  taken  more  largely  to 
manufacturing  for  themselves.  Still,  as  the  increase  of 
foreign  manufacturing  was  inevitable,  we  need  surely  concern 
ourselves  very  little  with  what  might,  could,  would,  or  should 
have  been,  and  content  ourselves  with  the  fact  that  the  actual 
development  of  our  foreign  trade  has  been  in  itself  satis- 
factory in  amount,  and  has  been  of  the  kind  we  may  expect 
if  foreign  manufactures  increase — that  is,  a  development  of 
our  own  miscellaneous  manufactures.  It  is  the  "  something 
else  "  which  has  grown  and  which  will  probably  continue  to 
grow. 

In  passing,  it  may  be  remarked,  that  lament  will  probably 
be  made  by  those  who  desire  to  see  trade  protected,  who  think 
they  can  do  better  for  people  than  they  can  do  for  themselves, 
over  some  parts  of  the  increase  of  our  exports  above  referred 
to.  In  exporting  coal  we  shall  be  told  that  w^e  are  exporting 
our  capital ;  in  exporting  machinery,  that  we  are  exporting 
the  very  instruments  of  foreign  competition  with  us  in  every 
market  of  the  world  and  at  home.  While,  however,  the 
immediate  result  is  satisfactory  enough  in  an  economic  view, 
it  would  not  be  easy  to  show,  on  economic  grounds,  that  a 
country  like  England  would  find  it  to  its  interest  to  seal  up 
its  coal  or  prevent  the  export  of  machinery.  Not  only  by  so 
doing  should  we  stop  present  trade,  but  we  do  not  know 
whether  the  effects  of  our  interference  would  have  the  effects 
proposed,  while  there  is  every  likelihood  of  the  interference 
producing  worse  evils  than  any  we  apprehend.  Suppose  the 
export  of  coal  restricted,  would  not  the  main  consequence 
probably    be    a    development    of    coal    mining    in    foreign 


FOREIGN   MANUFACTUUKS    AND    ENGLISH    TRADE.  2<il 

countries?  The  same  with  iiiacliiiiery.  Forei.^n  coimtriL'S 
beint^in  a  condition  generally  Miiich  lits  tlicni  to  engage  in 
manufactures,  if  we  prevent  them  from  getting  the  requisite 
machinery  here,  then,  instead  of  coming  to  us  for  the  other 
manufactures  which  M'e  would  like  them  to  buy,  and  M'hicli 
we  desire  to  prevent  them  making  for  themselves,  are  they 
not  much  more  likely  than  if  they  are  let  alone  to  engage  in 
tlie  business  of  machinery-making  on  their  own  account  i 
The  drawback  to  the  increase  of  our  foreign  trade  in  the  foct 
tliat  it  is  partly  an  increase  of  the  exports  of  coal  and 
machinery  is  thus  not  so  serious  as  it  appears.  Anyhow,  it  is 
impossible  to  show  that  under  any  ideal  conditions  we  should 
have  done  ])etter.  We  can  only  take  the  facts  of  our  actual 
trade,  and  .what  we  find  is  an  increase  in  every  way  satis- 
factory in  amount,  which  is  precisely  of  the  kind  that  would 
have  occurred  coincident  with  the  increase  of  miscellaneous 
industry  abroad,  while  we  do  not  know  that  there  would  have 
been  any  such  increase  in  amount  of  another  kind  if  mis- 
cellaneous industry  abroad  had  not  increased. 

It  is  possible,  indeed,  to  go  a  little  further.  The  exports 
of  coal  and  machinery,  as  well  as  of  iron  and  iron  manu- 
factures generally,  are  obviously  connected  very  closely  ^ith 
tlie  increase  of  miscellaneous  industry  abroad.  Coal  is 
exported,  for  instance,  to  be  used  in  steam  navigation  ;  to  be 
used,  indeed,  very  largely,  in  our  own  steamers  all  over  the 
•world.  It  is  also  exported  to  neighboxiring  Continental  ports 
for  use  in  the  miscellaneous  manufactures  of  those  ports  and 
neighbourhood.  Machinery,  again,  is  exported  l)ecause  there 
are  foreign  manufactures  in  which  machinery  is  used.  It  is 
an  important  trade,  entirely  dependent  on  that  growth  of 
foreign  manufacturing  which  is  so  much  doi»recated,  and 
which  we  should  not  have  at  all  if  we  put  obstacles  in  the 
way  of  exporting  machinery,  or   it"  in  ;tuy  other  way — for 


262     FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE, 

instance,  by  imposing  duties  on  foreign  manufactures  im- 
ported into  this  countr}' — we  hindered  the  natural  growth  of 
foreign  manufacturing.  But  the  exports  of  coal  and  machinery- 
are  not  the  only  trades  which  come  to  us  because  of  the 
increase  of  manufacturing  abroad.  Much  of  our  shipping 
business  depends  on  the  wealth  of  foreign  countries.  There 
would  certainly  be  less  of  it  if  foreign  countries  did  not 
manufacture  and  interchange  manufactured  products  with  us 
and  with  other  countries.  The  shipping  business  again 
dejDends  very  largely  on  those  very  exports  of  coal  and 
machinery  which  are  themselves  due  to  the  increase  of 
manufacturing  abroad.  AVhichever  way  we  turn,  therefore, 
we  appear  to  be  driven  to  the  conclusion  that  the  increase  of 
our  foreign  trade  is  not  only  consistent  with  or  in  spite  of 
the  increase  of  man^^facturing  abroad,  but  that  it  is  closely 
bound  up  with  and  dependent  on  that  very  increase.  There 
might  have  been  a  similar  increase  without  an  increase  of 
foreign  manufacturing,  but  it  is  by  no  means  certain  there 
would  have  been.  "What  we  have  got  is  an  increase  that  is 
dependent  on  the  increase  of  foreign  manufacturing.  We  may 
be  quite  sure,  besides,  that  there  are  other  trades  than  coal 
and  iron,  machinery  and  shipping,  which  are  dependent  on 
the  increase  of  manufacturing  abroad.  England,  as  the  work- 
shop of  the  world,  must  be  resorted  to  for  every  variety  of 
article  to  assist  the  miscellaneous  industry  of  foreign  nations. 
"We  reach  the  same  conclusion  by  a  comparison  of  the 
amount  of  our  trade  with  different  foreign  countries.  Our 
trade  is  by  no  means  exclusively  with  non-manufacturing 
countries,  but  very  largely  with  countries  like  France, 
Germany,  and  the  United  States,  which  would  be  those  that 
would  be  named  as  our  rivals  in  manufacturing.  If  we  put 
imports  and  exports  together,  we  find  that  out  of  a  total 
of  imports  and  exports  amounting  to  £732,000,000  in  1883,. 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     203 

the  imports  and  exports  from  und  to  the  countries  named, 
including  HoUand  and  Belgium,  which  for  many  purposes 
should  be  included  with  Germany  and  France,  owing  to 
the  close  communication  between  them,  amounted  to 
£336,000,000,  or  46  per  cent,  of  the  total.  If  we  consider 
merely  the  exports  of  British  and  Irish  produce,  we  find  that 
out  of  a  total  of  £240,000,000  of  such  exports,  £82,000,000, 
or  34  per  cent.,  were  to  the  same  countries.  These  propor- 
tions are  likewise  as  great  as  they  ever  were.  There  are  no 
good  figures  of  the  imports  before  1854,  so  that  the  total  im- 
ports and  exports  cannot  be  stated  till  that  year ;  but  at  tliat 
time  our  total  imports  and  exports  from  and  to  the  countries 
named  were  about  £121,000,000  out  of  a  total  of  £260,000,000, 
or  almost  exactly  46  per  cent.,  which  is  the  present  pro- 
portion. As  regards  the  exports  of  British  and  Irisli  produce, 
where  we  can  go  back  to  1840,  we  find  that  at  that  time  out 
of  rather  more  than  £51,000,000  of  such  exports,  the  total 
to  the  countries  named  was  £17,500,000 — again  almost 
exactly  the  present  proportion,  which  is  34  per  cent. 
Our  trade  with  manufacturing  countries,  therefore,  keeps  its 
proportion,  as  well  as  our  trade  with  countries  which  are 
not  considered  rivals  in  the  same  way.  The  increase  in  the 
one  case  is  as  great  as  in  the  other.  The  increase  is  also 
enormous.  To  take  our  exports  alone — as  that  is  the  factor 
about  which  there  is  most  feeling — it  is  found  that  to  our 
rivals  whose  competition  is  so  dreaded  we  are  now  exporting 
£82,000,000,  where  we  formerly  exported  £17,500,000  only, 
tlie  amount  of  the  increase  during  this  period,  while  foreign 
competition  lias  been  pressing  \\\nm  us,  being  no  less  than 
three  and  a  half  times  the  amount  of  the  trade  witli  which 
we  began.  The  comparison,  I  believe,  would  be  even  more 
striking  but  for  changes  of  i)rices  which  have  occurred.  The 
real  increa.se  of  trade  has  been  much  greater  in  reality  than 


264  FOREIGN   MANTrFACTtmES    AND   ENGLISH   TEADE. 

wliat  appears  from  a  comparison  of  values  only.  Taking 
the  entries  and  clearances  of  shipping,  we  find  that  in  1840 
the  entrances  and  clearances  at  ports  in  the  United  Kingdom 
from  and  to  the  countries  named  were  4,000,000  tons,  or 
43^  per  cent,  of  the  total  from  and  to  all  countries ;  in 
1883  the  entries  and  clearances  from  and  to  the  countries 
named  were  31,500,000  tons,  or  48^  per  cent,  of  the  total.* 
The  presumption  is  that  not  only  has  our  trade  with  the 
countries  named  maintained  its  proportion  of  a  total  trade 
which  has  increased  in  a  wonderful  manner,  but  that  it  has 
more  than  maintained  the  proportion.  Circumstances  may 
change,  but  there  is  yet  no  sign  in  these  figures  of  injury  to 
our  trade  because  of  the  increase  of  miscellaneous  industry 
among  the  countries  most  likely  to  be  our  manufacturing 
rivals. 

Another  aspect  of  the  facts  may  be  looked  at.  "We  have 
already  seen  how  certain  home  industries — the  production 
of  coal  and  iron,  the  manufacture  of  machinery,  and  shipping 
— probably  owe  their  development,  less  or  more,  to  the 
increase  of  miscellaneous  industry  abroad.  It  may  also  be 
pointed  out  that  English  manufactures  of  different  kinds 
probably  owe  their  development  in  a  very  direct  way  to 
foreign  manufactures.  The  two,  instead  of  being  antago- 
nistic, are  mutually  dependent.  Foreign  countries,  as  we 
have  seen,  depend  upon  us  largely  for  coal,  iron,  machinery, 
and  shipping.  To  some  extent  the  yarns  which  are  the 
staple  of  the  textile  industries  may  be  added  to  the  category. 
In  other  words,  our  own  manufactures  are  largely  co-opera- 
tive with  and  auxiliary  to  various  manufacturing  industries 
abroad.     Employment  in  these  manufactures  depends  on  the 

*  The  data  for  most  of  these  figures  will  be  found  in  a  convenient 
form  in  the  Sup])len]entary  Tables  in  the  Appendix  to  my  evidence 
before  the  Royal  Commission  on  Trade  Depression. 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     20") 

existence  of  mamifaetiires  aliroad.  In  the  same  way  tlie  so- 
called  manufactures  Nvliidi  we,  im])ort  from  foreign  countries, 
and  about  which  there  is  at  times  so  much  excitement,  are 
largely  the  raw  material  of  a  further  stage  of  manufacturing 
in  England.  Looking  over  the  lists  of  manufactured  and 
partly  manufiictured  articles  in  Mr.  1  Ritchie's  return  (No.  302, 
Sess.  1882),  one  is  especially  struck  by  the  fact  that  although 
the  articles  are,  logically  enough,  entered  as  manufactures, 
or  part  manufactures,  they  are,  nevertheless,  as  far  as  Englisli 
trade  is  concerned,  very  largely  raw  materials.  Out  of 
£54,000,000  of  "  manufactures  "  imported  in  1880,  the  latest 
year  in  the  return,*  I  sliould  estimate  that  at  least  £20,000,000 
are  indispensable  as  raw  material  to  our  own  manufactures. 
Such  articles  as  hides,  chemical  products  and  manufactures, 
skins,  turpentine,  tar,  metal  manufactures  of  all  kinds,  painters' 
colours  and  pigments,  paperhangings,  glass  of  difterent 
kinds,  are  all  plainly  less  or  more  the  raw  material  of 
different  industries  carried  on  witliin  tlie  I'nited  Kingdom, 
and  to  tax  them  would  hamper  our  home  industries  and 
cripple  us  in  the  production  of  articles  which  we  export  to 
foreign  markets.  As  regards  the  remaining  articles,  more- 
over, which  are  not  so  ol)viously  raw  materials,  it  has  to  be 
considered  that  most  of  them,  even  such  articles  as  silk  and 
woollen  manufactures,  are  themselves  the  raw  material  of 
millinery  and  dressmaking,  hat-making,  and  other  industries, 
whicli  art'  none  the  less  important  as  manufactures  because 
they  are  nf)t  tliought  of  as  such.  Moreover,  not  only  is  a 
certain  part  of  the  productions  of  these  industries  exi)orted, 
but  our  dei>ot  trade  is  concerned  with  the  whole  of  tliem,  as 
they  go  into  our  warehouses  and  shops,  and  help  to  attract 
from  all  parts  of  the  world  customei's  whose  jturchases  are 
not  necessarily  limited  to  one  class  of  goods,  liowever  power- 

*  The  return  has  since  been  continued.    See  No.  102,  Scss.  1885. 


266  FOREIGN   JIANUFACTURES   AND   ENGLISH   TRADE. 

fully  that  class  contributes  to  the  attraction.  Of  course,, 
what  is  true  of  the  so-called  "  manufactures  "  is  still  more 
true  of  the  "  part  manuftictures  "  in  the  return,  amounting  to 
£29,000,000  in  1880.  Here  the  various  articles,  such  as 
sawn  timber,  pig  and  sheet  lead,  copper  regulus,  and  oils  of 
different  kinds,  are  to  all  intents  and  purposes,  so  far  as  our 
home  manufactures  are  concerned,  undoubtedly  raw  material. 
Similarly,  an  article  like  refined  sugar,  which  is  entered  as 
an  article  of  food  in  the  above  return,  though  it  is  contended, 
I  believe,  that  it  should  be  entered  as  a  manufactured  article 
coming  into  competition  with  our  home  industries,  is  in 
reality  the  raw  material  of  home  mamifacturing.  It  does 
not  all  go  into  consumption  directly.  It  is  used  in  brewing 
and  distilling,  in  confectionery  and  jam  making,  in  biscuit 
making  and  other  manufactures,  and  gives  employment  in 
that  form  to  many  more  pei^ple  than  are  necessary  for  the 
refining.  In  this  sense,  also,  even  flour  is  a  raw  material, 
flour  being  a  necessary  raw  material  of  biscuits  and  other 
articles  of  export.  Foreign  countries  and  ourselves  are  thus 
mutually  dependent.  The  manufacture  of  one  country  iS' 
the  raw  material  of  another.  To  a  large  extent,  the  growth 
of  manufacturing  industry  abroad  only  affects  our  home 
industry  as  the  production  of  cheap  raw  material  affects  it. 


IV.— SUMMARY  AND  CONCLUSION. 

To  sum  up,  I  submit  that  T  liave  fully  proved  the  proposition 
with  which  I  started,  and  which  appears  so  hard  to  many — 
that  the  conditions  of  the  increase  of  miscellaneous  industry  in 
foreign  countries,  arising  from  the  increase  of  machinery  and 
inventions  and  the  diminishing  proportion  of  the  agricultural 


i 


FOREIGN   MANUFACTURES    AND    ENGLISH   TRADE.  267 

and   mining   population,  are   favourabk',  on   the   whole,  to 

English  trade.      This  has  been  shown  theoretically  from  a 

consideration  of  the  different  ways  in  which  the  population 

available  for  manufacturing  abroad  might  be  employed.     In 

whatever  direction  their  industry  might  be  turned,  it  was 

seen,  there  would   still  in  the   end  be  an  increase  of  the 

miscellaneous  demands  in  the  markets  of  the  world  which 

would  benefit  England  as  the  leading  manufacturing  country. 

The  same  conclusion  has  also  been  demonstrated  practically 

by  the  actual  facts  of  English   trade  for  more  than  forty 

years.      All    the   while    foreign    manufacturing    has    been 

increasing,  the  prosperity  of  England  has  been  advancing  in 

a  marvellous  way,  the  growth  of  population  in  this  country 

with  the  comfort  it  enjoys  being  unique  in  tlie  experience  of 

old  countries.     The  foreign  trade  of  England,  which  is  more 

specially  in  question,  has  also  increased  in  a  marvellous  way 

and  to  a  far  greater  extent  than  that  of  any  other  foreign 

country,  the  figures  on  this  head  being  simply  astounding. 

The  only  way  in  which  some  foreign  countries  are  made  to 

appear   to   be   gaining   on  us   is   by   the    manipulation    of 

percentages,  a   high   percentage   being   easily   shown  when 

tliere  is  a  low  figure  to  begin  with.     AVhen  the  trade  figures 

are    stated   i^er   head    of    the   population,   the    exceptional 

position  of  England  l>oth  as  regards  the  present  amount  of 

its  foreign  trade  and  the  increase  of  that  trade  in  the  past  is 

manifest.     Xext,  it  lias  been  made  evident  that  tlie  actual 

increase  of  our  foreign  trade,  large  as  it  has  been,  has  been 

an  increase  in  the  direction  we  should  look  for  on  theoretical 

grounds  when  the  miscellaneous  industry  of  foreign  countries 

is  increasing.     The  range  of  the  articles  we  exjiort  has  been 

constantly  widening.      Important  additions  are  made  from 

time  to  time  to  our  staple  articles,  and  there  is  a  huge  and 

growing  miscellaneous  trade  which  it  is  impossible  to  classify. 


268     FOREIGN  MANUFACTUHES  AND  ENGLISH  TRADE. 

Further,  a  large  part  of  the  growth  has  heen  in  the  exports 
of  coal,  iron,  machinery,  yarns,  and  the  like  articles,  and  in 
shipping  business,  whicli  are  all  dependent,  not  on  the 
consumption  of  foreign  countries  generally,  hut  on  the 
consumption  of  manufacturing  countries.  It  has  been 
proved  further  that  the  proportion,  of  our  trade  with  such 
countries  as  France,  Germany,  and  the  United  States  remains 
in  the  aggregate  as  great  as  it  was,  or  greater — that  the 
growth  of  our  foreign  trade  is  not  exclusively  dependent  on 
the  existence  of  uncivilised  countries  which  do  not  manu- 
facture, but  on  the  old  countries  also.  Last  of  all,  it  has 
been  shown  that,  just  as  our  own  manufactures  often  become 
tlie  raw  materials  of  manufacturing  industry  abroad,  so  the 
so-called  manufactures  we  buy  from  foreign  countries  are 
largely  the  raw  material  of  new  industries  at  home,  while  the 
dealing  in  them  assists  us  in  the  important  depot  trade  so 
vital  to  our  whole  business.  Thus,  practically  as  well  as 
theoretically,  it  is  evident  that  the  conditions  of  the  increase 
of  miscellaneous  industry  abroad  are  on  the  whole  favourable 
and  not  unfavourable  to  English  trade.  Not  only  has  that 
miscellaneous  industry  been  consistent  with  our  prosperity ; 
without  it  the  measure  of  our  prosperity  would  have  been 
much  less  full  than  it  has  been. 

I  have  to  apologise  for  tlie  length  at  wliich  I  have  brought 
forward  arguments  in  support  of  a  proposition  that  seemed  to 
me  when  I  wrote  it  in  1877  one  half  a  truism  and  the  other 
half  a  truth,  which,  though  not  so  obvious,  would  have  been 
accepted  for  good,  after  brief  reflection  only,  by  those  who 
are  accustomed  to  reflect  on  sucli  subjects  at  all.  My  excuse 
nnist  be  that  the  subject  has  grown  in  importance  as  I  have 
advanced.  I  have  made  the  discovery  that  there  are  peoj)le 
who  can  reason  about  such  facts  as  the  inevitable  increase 
of  miscellaneous   industry   in   foreign   countries,  as   if  the 


FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE.     2G9 

increase  could  Ijc  luaterially  promoted  Ity  tlie  jirotectioiiist 
measures  of  foreign  Governments,  whereas  such  measures 
can  only  diminish  it,  and  as  if  in  turn  the  effect  on  our  own 
trade,  whatever  it  is,  if  of  an  injurious  kind,  could  be  sensibly 
altered  for  the  better  by  any  measures  it  is  in  the  power  of 
our  own  Government  to  take.  Such  an  attribution  of  power 
to  Governments  to  influence  trade  for  good  is  bewildering 
but  at  the  same  time  instructive,  as  showing  the  existence  of 
a  class  in  our  midst  to  whom  the  simplest  elements  of 
common  sense,  not  to  speak  of  political  economy,  have  to  be 
made  very  plain  indeed — if  they  ever  can  be  made  plain  to 
such  reasoners.  The  same  class  of  people,  I  find,  are  also 
simple  enough  to  put  the  question  as  to  how  a  few  hundreds 
of  labourers,  who  may  be  displaced  by  some  particular 
foreign  competition,  are  to  find  employment,  as  if  putting 
this  question  were  a  conclusive  answer  to  the  assumptions  of 
political  economists,  justified  by  endless  experience,  that 
labour,  like  other  things,  is  mobile,  and  that  the  loss  of  employ- 
ment in  one  direction  does  not  mean  permanent  loss  of 
employment  altogether,  but  may  only  mean  temporary  loss. 
The  question  too  is  put  in  England,  of  all  countries  in  the 
world — that  is,  in  a  country  which  has  found  room  in  eighty 
years  for  twenty  millions  of  new  people,  twice  the  number 
in  existence  at  the  beginning  of  the  period,  and  the  whole 
thirty  millions,  on  the  average,  now  enjoying  more  of  the 
necessaries  and  luxuries  of  life  per  head  than  the  smaller 
utmiber  did  at  the  beginning  of  the  century.  That  such 
reasoners  exist  and  confuse  and  perplex  opinion  by  the 
wildest  misconceptions  and  misstatements  must  be  one  of 
my  excuses  for  trying  to  set  in  order  the  true  ideas,  as  I 
maintain,  as  to  the  nature  of  miscellaneous  industry  in 
foreign  countries,  and  its  relation  to  our  own  trade.  The 
subject  is,  moreover,  intrinsically  important  and  is  connected 


270  ,    FOREIGN  MANUTACTUBES  AND  ENGLISH  TRADE. 

with  important  issues.  The  nature  of  the  progress  to  be 
made,  not  only  by  ourselves,  but  by  other  peoples,  as 
macliinery  and  inventions  multiply,  and  the  masses  are 
better  fitted  to  use  them,  is  surely  a  problem  of  the  deepest 
interest,  quite  apart  from  its  bearing  on  such  petty  con- 
troversies of  the  moment  as  that  of  fair  trade.  Such  a 
question,  for  instance,  as  the  remuneration  of  labour  in  each 
country  concerned  may  depend  on  it.  An  event  which  is 
steadily  approaching,  as  far  as  I  can  judge,  is  the  equalisation 
of  conditions  in  different  countries,  so  that  the  prosperity  of 
all  the  great  countries  is  becoming  more  and  more  a  leading 
concern  of  each,  and  especially  the  concern  of  the  workmen 
in  each,  as  the  remuneration  of  labour  cannot  rise  or  fall  in 
one  country  without  rising  or  falling  in  all.  For  these  reasons, 
quite  apart  from  momentary  controversies,  a  right  apprehen- 
sion of  the  facts  as  to  the  increase  of  miscellaneous  industry 
abroad  is  expedient.  On  the  whole,  though  with  many 
transitions  and  changes,  I  should  anticipate  beneficial  results  ; 
but  the  fact  of  our  moving  into  a  new  world,  without 
■  power  to  prevent  the  movement,  should  itself  be  recognised 
and  studied,  whatever  the  results  may  be. 

I  may,  perhaps,  be  allowed  to  add  one  or  two  remarks  to 
prevent  some  simple  misunderstandings. 

1.  I  have  been  dealing  only  with  an  increase  of  manu- 
facturing abroad  under  natural  conditions.  This  is  quite 
evident,  I  should  hope,  from  the  constant  association  I  have 
traced  between  this  increase  and  the  relative  diminution  of 
the  numbers  of  people  engaged  in  agriculture  and  mining  as 
compared  with  those  engaged  in  other  industries.  Con- 
sequently, it  is  not  inconsistent  for  me  to  maintain  that 
an  increase  of  manufacturing  abroad  due  to  protectionist 
measures  is  not  the  same  thing,  and  will  not  have  the  same 
results,  as  the  natural  increase.     The  whole  change  in  such 


FOREIGN   MANUFACTURES    AND    ENGLISH   TKADE.  1 1  1 

«  case,  involving  a  diversion  of  industiy  from  tlu;  more 
prolitablc  to  the  less  protitiiljlc  unijjloynient,  must,  of  course, 
be  injurious  to  all  concerned.  At  the  same  time,  this 
(jualification  is  not  material  for  the  purpose  I  have  had  in 
hand.  Substantially,  the  increase  of  miscellaneous  industry 
al)road  with  whicli  I  have  been  dealing  is  due,  not  to 
protectionist  measures,  but  to  natural  causes.  Even  in  the 
United  States  the  miscellaneous  industry  which  is  un- 
protected enormously  exceeds  the  protected  industry  which 
it  is  taxed  to  support.  The  assumption  that  foreign  manu- 
facturing has  largely  increased  by  means  of  protection  is 
one  of  those  wild  assumptions  which  constantly  crop  up  in  a 
certain  species  of  political  and  party  literature,  but  for  which 
it  is  never  possible  to  find  a  scintilla  of  evidence,  and  whicli 
are  entirely  opposed  to  broad  facts  regarding  wliich  tliere  can 
be  no  dispute.  The  greater  part  of  the  miscellaneous  industry 
of  every  country  is  of  a  kind  which  cannot  be  protected 
because  it  is  necessarily  houie  industry. 

2.  An  increase  of  free  trade  aljroad  would  und(jul)tedly 
increase  miscellaneous  industry  there.  Protection  kee})S 
every  nation  that  suffers  from  it  poorer  than  it  would  other- 
wise be,  and  hinders  the  natural  development  of  trade.  Such 
an  increase  of  miscellaneous  industry,  however,  would,  in  my 
opinion,  and  according  to  the  arguments  I  have  advanced,  bo 
favourable  to  English  trade.  Apparently  opposite  views 
have  been  expressed  by  good  authorities  in  which  I  cannot 
join.  Tlic  United  States,  it  has  been  said,  nmst  cut  out 
England  in  many  markets  if  tliey  become  free  trading,  and 
consequently  do  us  much  damage.  The  "consequently"  I  do 
not  agree  to.  The  innnediate  and  transitory  effect  njijK'ars  to 
be  mistaken  in  this  reasoning  for  the  permanent  effect, 
llehitively,  perhaps,  the  United  States,  with  all  its  natural 
advantages,  may  advance  ([uicker  under  free  traile  tliaii  we 


272     FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE. 

shall  then  do ;  hut  ahsolutely  we  shall  he  hetter  off.  We 
shall  advance  quicker  than  we  should  otherwise  do,  and 
shall  he  all  the  richer  because  of  the  increased  wealth  of  so 
large  a  customer  and  neighbour. 

3.  While  we  can  do  nothing  to  prevent  the  increase  of 
jniscellaneous  industry  abroad  due  to  general  causes,  we  may 
certainly  by  jirotectionist  measures  promote  some  sorts  of 
jnanufacturing  abroad  to  our  own  hurt.  I  have  referred 
already  to  such  an  effect  having  resulted  from  our  protectionist 
measures  before  1843.  There  can  be  no  doubt  that  such  an 
effect  was  produced.  By  taxing  foreign  corn  coming  into 
this  country,  we  rendered  Saxony  and  other  countries,  as  we 
would  not  take  their  corn  from  them,  unable  to  take  our 
manufactures,  and  forced  them  to  manufacture  for  themselves. 
This  was  the  origin  of  a  good  deal  of  manufacturing  in 
8axony,  and  it  was,  in  part,  to  prevent  such  mischiefs  that 
our  corn  duties  were  finally  abolished.  The  whole  change 
involved  in  such  an  increase  of  manufacturing  abroad  is,  of 
course,  injurious,  because  industry  is  diverted  from  its  natural 
channels.  Both  England  and  Germany  were  injured  by  the 
change. 

It  does  not  follow,  moreover,  as  I  have  seen  it  argued,  that 
every  sort  of  protection  in  one  country  promotes  manu- 
facturing in  another.  It  was  only  protection  on  the  import 
of  corn  into  this  country  which  compelled  the  country  selling 
corn  to  take  to  manufacturing.  The  poverty  caused  by  the 
process  ought  also  to  be  considered  in  such  a  question. 
IManufacturing,  as  a  whole,  was  diminished  by  the  process, 
and  both  England  and  Saxony  were  poorer,  whereas  with 
an  increase  of  manufacturing  under  natural  conditions  all 
concerned  are  enriched. 

4.  The  effect  of  any  protectionist  measures  in  England, 
owing  to  the  miscellaneous  nature   of  our  trade,  would   be 


FOREIGN    MANUFACTURES    AND    ENGLISH    TRADE.  27.1 

iinincasunilily  disastrous.  Our  iiaili-  is  too  bi^  and  various  to 
l>etanii»evecl  with.  11'  we  put  duties  ou  corn,  apart  from  other 
evils,  we  shall  promote,  as  we  did  before,  some  maiiufacturiuj,' 
iibroatl  to  our  own  hurt  and  injury  and  the  disadvantage  of 
all  concerned.  If  we  put  a  tax  on  so-called  manufactures,  we 
sliall  lianiper  our  own  nianul'aeluiiiig  development,  prevent 
the  exchange  of  numufactures  which  now  takes  place,  injure 
<Hir  sln])ping,  and  inflict  a  thousand  evils  whicli  it  would  be 
impossible  to  foresee,  even  if  it  were  ]»ossilile  to  imagine  the 
tariir  wliich  our  Ivmyds  and  ]\Iaclvers  would  apply  to 
English  imports. 

5.  The  fact  that  so  much  trade  has  been  developed  in  the 
last  forty  years,  owing  to  natural  conditions,  is  of  the  best 
angury  ior  the  eventual  triumph  of  free  trade.  Personally  I 
have  never  been  able  to  take  the  slightest  interest  in  fair  trade 
literature  or  controversy,  not  only  because  of  the  staleness  of 
the  discussion,  but  because,  in  fact,  free  trade  is  continually 
triumphing.  Xot  only  is  England,  tlie  Iciuling  commercial 
country,  committed  to  it  irreversibly,  but  the  natural 
forces  are  everywhere  making  ridiculous  the  efforts  of 
ignorant  politicians,  surely  an  ignorant  class  everywhere, 
who  think  they  can  snatch  a  petty  advantage  for  some 
jiarticular  trade.  There  is  much  more,  very  much  more,  free- 
<lom  of  trade  in  the  world  than  there  ^^■as  forty  or  thirty 
years  ago.  Troliibitive  tariffs  are  things  of  the  past ;  the 
high  tariffs  replaced  by  the  Cobdcn  tariffs  have  not  again  been 
restored  ;  the  tariffs  which  exist,  high  as  they  are,  have  been 
largely  neutralised  by  cheap  railway  communication,  cheap 
freiglits,  increased  telegraphic  facilities,  improved  harbours, 
enterprises  like  the  Suez  Canal,  and  other  expedients. 
Tarticular  Clovernments  may  fight  against  the  tide  in  liumau 
affairs  which  is  strongly  setting  towards  the  most  unrestricted 
trade   between  all  cnmtries,  but,  looking  to  the  progress  of 

IF.  T 


274     FOREIGN  MANUFACTURES  AND  ENGLISH  TRADE. 

the  last  half  century,  they  will  apparently  fight  in  vain.  Tlie 
volume  of  business  in  all  directions  is  swelling,  mocking  the 
petty  interferences  of  politicians  ;  and  these  interferences,  I 
believe,  before  very  long — in  a  period  which  must  be  counted 
as  short  in  the  history  of  nations — will  be  too  irksome  and 
ridiculous  to  l)e  endured.  In  any  case,  the  growing  magni- 
tude of  the  trade  that  is  really  free,  the  growing  insignificance 
of  tariffs,  owing  to  the  strength  of  natural  causes  fighting 
against  them  and  promoting  the  trade  which  they  hinder, 
must  not  be  lost  sight  of  in  all  these  discussions  ;  nor  must 
it  be  concluded  that  because  many  public  men  and  politicians 
here  and  abroad,  for  sectional  and  party  purposes,  talk  pro- 
tection and  favour  protectionist  expedients,  therefore  the 
principles  and  practice  of  free  trade  are  losing  ground.  The 
doings  and  acts  of  politicians  bulk  largely  in  the  public  eye, 
but  they  are  not  the  only  things  that  count.  The  fair  trade 
politicians  at  home  are  mainly  mischievous  because  their 
speech  and  writing  give  the  idea  abroad  that  the  commercial 
leaders  of  England  are  not  equal  to  the  high  position  they 
have  attained,  and  no  longer  possess  that  untiring  energy 
and  elasticity  which  gained  them  a  leading  place,  and  which 
induced  their  predecessors  sixty  years  ago  to  petition  tlio 
Government  of  that  time  to  let  them  alone.     [1885.] 


(     275    ) 


YIII. 

THE  UTILITY  OF  COMMON  STATISTICS.* 

Ix  conimencing  our  lal>ours  for  another  session,  we  are  pain- 
fully reminded  that  during  the  past  twelve  months  the 
Society  has  sustained  two  heavy  losses,  in  the  death  of 
Mr.  Newmarch  and  Professor  Jevons.  At  a  meeting  like 
the  present,  some  tribute  is  due  to  the  memory  of  these 
distinguished  members.  To  some  extent  a  record  of  Mr. 
Newmarch's  death  and  services  has  already  been  preserved 
in  our  proceedings,  but  something,  I  feel,  ought  also  to  be 
said  at  this  inaugural  meeting,  considering  his  many  and 
diversified  statistical  labours,  and  the  length  of  the  period 
during  which  he  was  identified  with  us,  first  as  Secretary 
and  Editor  of  the  Journal,  and  afterwards  as  President, 
The  death  of  Professor  Jevons — all  the  more  to  be  regretted 
as  a  lamentable  accident — has  occurred  since  the  last  meeting 
of  last  session,  and  this  is  the  first  opportunity  w^e  have  had 
of  paying  a  tribute  to  his  memory. 

"With  regard  to  Mr.  Newmarch,  it  will  l)e  unnecessary  to 
go  over  the  record  of  his  life  in  detail,  or  to  enumerate  his 
various  works  ;  of  these  a  very  full  account  will  be  found  in 
the  ]\Iarch  number  of  the  Jovrnal  of  this  year.  What  I 
should  like  to  do  now,  is  to  put  on  record  the  special  con- 
sideration in  which  he  was  held  here  for  his  knowledge  of 
economic  statistics,  especially  trade  and  banking  statistics, 

•  luauKural  Address  as  Prcsiilcnt  of  the  Statistical  Society. 
Delivered  ou  Tuesday,  21st  November,  1882. 

T  2 


276  THE   UTILITY    OF   COMMON    STATISTICS. 

and  liis  skill  in  using  them.  He  was  remarkaljle  not  merely 
as  a  statistician,  but  as  a  man  of  l)usiuess  and  as  an  economist, 
and  his  special  forte,  as  a  statistician  was  to  throw  light  on 
problems  connected  with  the  theory  of  business — especially 
banking — and  on  the  applications  of  political  economy  to  the 
real  world  by  means  of  statistics.  In  lal)Ours  of  this  kind 
he  was  among  the  first  in  the  field.  Mr.  Tooke,  whom  he 
recognised  as  a  master,  had  preceded  him  as  a  pioneer, 
showing  the  way  to  reason  out  disputed  points  in  the  theory 
of  currency  and  banking  by  statistical  illustrations  from 
actual  business  experience :  his  demonstrations  on  such 
points  as  the  dependence  of  prices  on  credit,  and  the  fact  of 
a  rise  of  prices  preceding  and  not  succeeding  the  expansion 
of  a  paper  currency,  being  still  among  the  best  examples  of 
the  right  use  of  statistics  in  economic  discussions.  But  Mr. 
Newmarch  followed  in  the  steps  of  his  great  master  with  a 
command  of  facts,  and  a  power  of  analysing  and  grouping 
figures,  wliich  in  the  same  field  were  at  that  time  without 
example.  His  most  signal  achievement  was  the  preparation 
of  the  last  two  volumes  of  the  '  History  of  Prices,'  a  book 
well  known  here,  though  it  has  been  long  out  of  print.  The 
information  and  comments  in  those  two  volumes  on  the  great 
economic  changes  about  the  middle  of  the  present  century, 
including  the  introduction  of  free  trade,  the  Bank  Charter 
Act,  the  Irish  famine,  the  French  revolution  of  1848-51,  the 
gold  discoveries  in  liussia,  California,  and  Australia,  and 
finally  the  Crimean  war,  make  them  still  a  most  valuable 
record ;  while  the  discussion  on  many  points  of  banking 
practice  and  economic  theory,  especially  on  all  points  relating 
to  the  use  and  abuse  of  credit,  and  the  periodicity  of  move- 
ments in  trade,  remains  to  this  day  the  fullest  exposition  on 
these  topics  to  wliich  the  student  can  be  referred.  There  are 
better  books  perhaps  on  single  points,  such  as  Mr.  Bagehot's 


THE    UTILITY    OF   COMMON   STATISTICS.  277 

'L()Uil)aid  Street/  in  wliieli  the  ediistituent  elements  of  the 
money  market  are  ileseribed,  and  the  theory  of  a  Lank 
reserve  is  set  forth  and  illustrated;  but  the  numljer  and 
variety  of  topics  in  Mr.  Newmarch's  book,  and  the  way  in 
which  the  various  economic  movements  of  the  time  are 
grasped  and  set  in  one  picture,  make  it  of  unique  value. 
"Whetlier  it  is  the  eflect  of  the  gold  discoveries  in  bringing 
new  resources  into  the  money  market,  and  giving  a  vast 
impetus  to  trade,  or  the  effect  of  a  great  movement  of 
misration  on  the  trade  of  old  and  new  countries  alike,  or  the 
financial  consequences  of  a  great  war,  Mr.  Newmarch  is  at 
home  in  the  discussion.  Apart  also  from  the  light  it  throws 
on  the  special  questions  treated,  and  as  regards  which  it  may 
be  of  course  superseded  by  fuller  and  later  statistics,  and  by 
wholly  new  circumstances,  the  book  must  long  remain  of 
value,  I  believe,  as  a  specimen  of  method  and  of  what  can  be 
done  by  the  use  of  statistics.  Indirectly,  I  believe,  it  has 
been  the  beginning  of  much  financial  writing,  as  it  is  really 
the  parent  of  a  book  like  M.  Neumann-Spallart's  '  Annual 
Ileview  of  the  World's  Trade,'  on  the  one  hand,  and  of  much 
of  that  writing  on  "  trade  and  finance  "  and  those  columns  of 
"  City  notes "  which  we  now  see  in  many  newspapers. 
Mr.  Newmarch,  in  fact,  })<>pularised  the  idea  that  tlie  daily 
changes  in  the  movement  of  business  can  be  generalised  ami 
referred  to  the  working  of  the  laws  of  human  nature,  and  in 
a  thousand  ways  the  idea  has  been  worked  out  and  made 
useful  to  the  world.  That  in  the  end  the  course  of  business 
will  Ite  better  understood  generally,  with  useful  results  both 
to  business  men  and  to  society,  there  can  be  little  doubt. 

Besides  thus  recognising  Mr.  Newmarch's  special  place  as 
a  statistician,  we  are  bound  to  say  a  few  words  here  on  his 
special  .services  to  the  Soeiety.  Among  these  I  would  place 
in  the  first  rank  his  labours  as  editor  of  the  Journal.     Look- 


278  THE    UTILITY   OP   COMMON   STATISTICS. 

ing  over  the  back  numbers,  it  may  be  perceived  tliat  from 
the  time  he  took  the  Journal  in  hand  there  was  not  only  a 
considerable  improvement  in  the  misceHaneous  information, 
wliich  was  more  particularly  in  his  own  care,  but  an  im- 
provement as  well  in  the  general  character  of  the  papers 
read  at  our  meetings.  One  explanation  of  this  improvement 
must  of  course  have  been  the  steady  growth  of  the  Society 
in  numbers  and  resources,  and  in  the  standard  of  statistical 
excellence ;  but  the  improvement  was  not  altogether  a  spon- 
taneous growth  from  Ijelow,  it  was  encouraged  from  above  in 
a  variety  of  ways,  I  can  speak  from  personal  knowledge 
of  Mr.  JSTewmarch's  exertions  to  make  the  best  use  of  his 
materials,  and  to  diffuse  a  genuine  love  and  appreciation  of 
the  study  he  favoured.  It  w\as  extremely  characteristic  of 
him  that  to  the  last  he  was  strongly  interested  in  young 
men.  Wherever  he  could  see  any  talent  or  liking  for 
economics  and  statistics  in  a  younger  generation  than  his 
own,  he  was  the  first  to  applaud.  I  am  proud  to  acknowledge 
for  myself  that  I  owe  the  beginning  of  my  close  connection 
with  the  business  of  the  Society  to  Mr.  Newmarch's  kindness, 
and  I  have  had  reason  to  observe  in  many  other  cases  his 
warm  interest  in  youth,  and  the  pains  he  took  to  encourage 
and  bring  others  forward.  His  services,  however,  were 
manifold,  and  it  is  only  fitting  that,  as  he  identified  himself 
so  closely  with  us,  we  should  do  honour  to  his  name.  The 
success  of  the  Xewmarch  Memorial  Fund  must  lie  to  all  of  us 
a  matter  for  satisfaction.  The  memory  of  the  great  services 
he  rendered  will  be  perpetuated  in  an  appropriate  manner. 

In  the  death  of  Professor  Jevons  the  Society  has  also 
sustained  a  very  great  loss.  Partly  because  he  was  so  much 
junior  to  Mr.  Xewmarch,  and  had  probably  many  years  of 
life  left  in  which  to  render  us  distinguished  service,  and 
partly  because  of  the  engrossing  nature  of  his  literary  work, 


Till';    UTILITY   OF   COM.MON    STATISTICS.  279 

^\•llicIl  iiKuIo  I'oniiiil  l)U.siiics.s  distustcful  to  him,  Mr.  Jt-voiis 
never  took  the  prominent  ])art  in  tlie  (hiily  W(jrk  of  tlie 
Siiciety  for  which  liis  eminent  ,uifts  and  Libours  as  a  statis- 
tieian  so  well  qualified  him.  lie  was  for  some  years,  liow- 
ever,  one  of  our  secretaries,  a  regular  attendant  of  our 
meetings,  and  a  fre([uent  contril)utor  to  the  Journal.  In  the 
proper  work  of  a  statistician,  moreover,  there  are  few  men 
\\\\o  have  left  a  Ijetter  name  on  our  records.  I  need  only 
refer  specially  to  three  of  Ms  principal  works.  Twenty  years 
ago,  when  he  was  still  comparatively  a  young  man,  his  bo(jk 
on  the  depreciation  of  gold  arising  from  the  gold  discoveries 
justly  attracted  no  small  attention,  both  from  the  complete- 
ness of  the  method  employed,  and  the  striking  character  of 
the  conclusion  whidi  he  came  to — that  while  there  had  Ijcen 
depreciation  to  a  moderate  extent,  there  had  been  no  sucli 
depreciation  as  many  great  economists  had  anticipated.  A 
few  years  after^-ards  his  l)ook  on  the  "  Coal  Supply"  drew 
attention  to  a  proljlem  wdiicli  is  inevitably  raised  [)y  the 
limited  character  of  tlie  Englisli  coal  field,  and  the  rapidly 
increasing  demands  upon  it.  This  book  had  a  wide  success 
of  notoriety,  and  it  was  unfortunate,  perhaps,  that  it  was 
only  too  popular,  the  public,  which  sehlom  makes  nice 
distinctions,  running  away  witli  the  notion  that  Mr.  Jevons 
jiredicted  the  actual  s[)eedy  exhaustion  of  the  EngKsh  coal 
supply.  Tliis,  of  course,  was  nonsense.  His  real  conclusion, 
however,  viz.,  tluit  one  of  the  present  conditions  of  Englisli 
prosperity  was  rapidly  altering  for  the  worse  was  undeniable, 
and  was  amply  justified  by  the  experience  of  tlie  coal  famine 
of  1873,  Few  more  interesting  books  lune,  perhaps,  been 
written  ;  and  there  are  few  better  examples  of  the  kind  of 
statistical  works  which  ought  now,  with  the  increasing  breadth 
of  statistical  data,  to  be  more  largely  written,  viz.,  those 
dealing  with  the  characteristic  social  and  economic  problems 


280  THE  trxnjTY  of  comioN  statistics. 

of  the  age.  It  is  to  such  works  statesmen  and  politicians- 
must  look  for  a  right  comprehension  of  their  task.  Shortly 
afterwards,  in  1868,  ]\Ir.  Jevons  read  a  paper  on  the  state 
of  our  gold  coinage,  in  which  the  same  tlioroughness  and 
completeness  exhibited  in  all  his  statistical  works  was  again 
conspicuous,  and  which  has  since  been  the  model  of  more 
than  one  similar  inquiry.  Besides  these,  Mr,  Jevons  wrote 
many  smaller  M'orks,  which  were  all  characterised  by  great 
completeness  of  method ;  but  these  three  larger  works  are 
quite  sufficient  to  found  his  reputation.  They  all  show 
inventiveness  and  resource,  and  a  careful  attention  to  every 
point  which  can  qualify  the  figures  so  that  the  real  facts,  and 
not  the  apparent  ones,  are  brought  out.  An  index  number, 
such  as  he  used  in  the  first  paper  of  all  on  the  gold  cpiestion, 
has  proved  an  instrument  of  gi-eat  value  since  in  all  inquiries 
on  prices  ;  and  for  tliis  institution  of  an  "  index  number  "  we 
may  consider  ourselves  indebted  to  Mr.  Jevons.*  In  the 
later  years  of  his  life  Mr.  Jevons  became  even  better  known 
as  an  economist  and  a  writer  on  logic  than  as  a  statistician, 
the  place  he  took  being  a  high  one ;  and  without  discussing 
his  work  in  that  capacity,  we  must  recognise  liow  his  qualifi- 
cations for  other  departments  of  literature  were  no  disqualifi- 
cation, but  the  reverse,  for  the  study  and  practice  of  statistics. 
His  statistics  would  not  have  been  as  good  as  they  were  if 
he  had  not  liad  wider  interests,  and  a  reniarkaljle  faculty  for 
clear  scientific  exposition  in  other  branches  of  science. 

Such  are  the  two  men  we  have  lost  within  the  short 
period  of  twelve  months.  The  loss  is  a  heavy  one ;  but  few- 
would  have  been  more  ready  to  recognise  than  those  we  have 

*  An  index  number  was  used  by  Mr.  J.  B.  Smith  as  long  ago  as 
1840  in  giving  evidence  on  the  Bank  Acts,  but  wliether  he  was 
actually  the  first  inventor  I  do  not  know.  Practically,  Mr.  Jevous  was 
the  first  to  systematise  the  use  of  the  method. 


THE    UTILITY    OF    COMMON    STATISTICS.  281 

lost  lliat  the  work  remains,  whatever  becomes  oi'  the  imli- 
vithial  With  Mr.  Newmareli  this  feeling,  as  I  have  already 
hiiiteil,  was  always  present.  It  was  always  of  good  work 
in  statistics  and  not  of  his  own  good  work  he  was  thinking. 
If  younger  men  could  he  induced  to  come  into  the  field,  he 
was  but  too  well  pleased  to  give  up  the  task  to  them,  so  long 
as  the  work  was  done.  His  example  and  spirit  will  be 
handed  down,  I  trust,  through  many  generations  of  laljourers 
at  these  meetings.  In  another  point  also  the  example  and 
spirit  of  Ijoth  Mr.  Xewniarch  and  ]\Ir.  Jevons,  it  may  l)e 
hoped,  will  be  imitated.  I  have  already  glanced  at  the 
point,  but  it  may  be  specially  emphasised.  It  is  that  they 
were  neither  of  them  specialists,  but  they  were  both  other- 
wise distinguished — Mr.  Newmarch  as  a  man  of  business 
and  an  economist ;  and  Mr.  Jevons,  as  a  litterateur,  a  man  of 
science,  and  a  logician.  It  will  be  an  unfortunate  day  for  us 
if  men  of  business  like  Mr.  Newmarch,  and  men  of  general 
scientiilc  and  literary  eminence  like  Mr.  Jevons,  ilo  not  take 
an  interest  in  our  pursuits.  Statistics  are  related  to  so  many 
different  sciences,  and  the  knowledge  of  them  is  so  essential  to 
the  politician  and  historian,  that  there  is  no  study  which  is 
more  certainly  failing  to  obtain  its  proper  place,  if  it  is  not 
known  to  and  made  use  of  by  those  who  are  identiiied  with 
other  pursuits  and  by  men  of  general  culture. 

1  am  sure  you  will  not  think  I  have  taken  up  too  much  of 
your  time  in  doing  honour  to  the  friends  whom  we  have  lost. 
I  pass  on  with  some  diflidence  to  deal  with  some  topic  of 
"sneral  interest,  such  as  you  lune  been  accustomed  to  have 
dealt  with  in  their  introductory  addresses  by  my  predecessors. 
In  recent  years  the  field  has  been  very  fully  occupied.  You 
have  had  sucli  papers,  for  instance,  as  that  of  Mr.  Lefevre, 
on  the  use  and  abuse  of  statistics,  covering  a  great  deal  of  the 


f 

282  THE    UTILITY   OP   COMMON   STATISTICS. 

ground  for  discussion  on  the  theory  of  statistics.  You  have 
had  other  papers  l)y  experts  in  particuLar  Ijranches  of 
statistics,  such  as  the  addresses  by  my  distinguished  im- 
mediate predecessor,*  on  the  agricultural  depression  of  the 
country  and  the  probable  future  of  the  agricultural  industry. 
The  field  of  new  observation  has  thus  been  greatly  reduced. 
It  has  occurred  to  me,  however,  that  without  attempting  a 
new  discussion  on  the  theorv  of  statistics,  or  uivinfj  an 
address  on  some  particular  topic  of  urgent  interest,  I  may 
perhaps  be  able  to  say  something  useful,  l)y  pointing  out 
some  of  the  uses  to  society  of  the  more  common  figures  of 
statistics,  especially  those  figures  which  assist  in  modifying 
or  directing  the  political  thought  of  the  time,  or  in  presenting 
problems  for  politicians  and  philosophers  to  consider,  even  if 
they  do  not  much  assist  in  tlie  solution.  The  greater 
successes  of  statistics,  and  their  main  uses,  thoudi  not  so 
well  known  as  they  should  be,  are  nevertheless  fairly  under- 
stood. The  construction  of  life  insurance  tables,  for  instance  ; 
the  means  of  comparing  rates  of  mortality  in  different  places, 
and  between  the  same  places  at  different  times  ;  the  constant 
utility  of  statistics  in  political  discussion,  and  their  equal 
utility  in  daily  business — are  all  matters  tolerably  well 
known  and  admitted.  But  what  seems  not  to  be  so  well 
understood  is  our  indebtedness'  to  the  common  figures  of 
statistics  for  many  wide  and  far-reaching  political  ideas, 
wliich  influence  and  guide  political  thought  and  action  and 
pliilosophic  speculation  insensibly.  Witli  the  systematic 
collection  of  statistic?;  continued  for  many  years,  there  has 
come  to  be  published  a  whole  library  of  statistical  annuals — 
whether  they  are  official  statistical  abstracts  or  annuaircs, 
such  as  many  countries  now  publish,  or  unofficial  pul)lica- 
tions    like  tlie  'Annuaire  de  I'Economie  politique,'    or  the 

*  Sir  James  Caircl. 


THE   UTILITY    OF   COMMON   STATISTICS.  283 

'Statesman's  Year  Book,'  or  M.  Neiuiuuiu-.Spallart's  *  Animal 
lieview  of  the  World's  Industry.'  These  books,  it  seems  to 
me,  besides  having  many  practical  uses,  supply  a  necessity 
of  political  thonj^lit  at  the  present  time,  and  are  constantly 
and  insensibly  guiding  political  and  pliiloso})liical  speculation. 
What  I  propose  to  discuss  to-night,  then,  are  some  of  tlie 
more  common  figures  which  lie  on  the  surface  of  the  most 
accessible  books.  As  with  other  good  and  common  things, 
we  have  become  so  used  to  sucli  Ijooks  that  we  hardly  kncjw 
what  we  should  miss  if  they  were  blotted  out, — it"  puljlic 
men  and  writers  were  without  them,  as  in  fact  they  were 
without  them  until  about  half  a  century  ago.  If  we  attempt 
to  realise  what  we  should  do  M'ithout  such  books,  we  shall 
not  fail  to  see  that  statistics  have  many  unsuspected  uses, 
iind  not  least  are  they  useful  for  the  knowledge  they  in- 
sensibly diffuse  throughout  the  world. 

I  shall  deal  more  especially  with  the  most  common  figures 
of  all,  viz.,  those  of  population.  The  utility  of  the  most 
general  notion  which  we  derive  from  statistics  of  the  dis- 
tribution of  the  earth's  surface  among  different  races  and 
nations  is  palpable.  We  can  see  at  once  that  a  small  corner 
like  Europe  is  closely  peopled  by  the  European  family  nf 
nations,  whilst  the  northern  peoples  of  that  family  also 
possess  a  large  new  field  of  territory  in  North  America, 
Australia,  and  Northern  Asia,  and  the  more  southern  peoples 
a  large  new  field  of  territory  in  Central  and  South  America. 
The  European  family  is  ihus  dc  facto  in  possession  of  a  large 
tract  of  the  earth's  surface  for  its  own  habitation,  perhaps 
a  half  or  more  of  the  area  available  for  producing  the  food 
of  civilised  races.  Further  consideration  would  show  wliat 
races  in  particular,  among  the  nations  of  Europe,  have  this 
inheritance;   but  the   point  is,   the   predominance    of    the 


284  THE   UTILITY   OF   COMMON    STATISTICS. 

European  race  in  mere  extent  of  territory,  coupled  witli  tlie 
peculiarity  that  the  bulk  of  this  population  is  still  living  on 
a  comparatively  narrow  tract  in  Europe.  The  rest  of  the 
world — China,  India  and  Africa — is  possessed  by  races  of 
greatly  differing  type,  on  whose  territory  Europeans  do  not 
press  as  colonists,  though  they  may  settle  in  small  numbers 
as  governors,  or  traders,  or  both,  th-anting,  on  the  average, 
a  difference  in  point  of  material  strength  per  unit  of  popula- 
tion between  these  European  and  all  other  races,  it  is  easy 
to  understand  at  once  the  idea  that  the  future  of  civilisation 
belongs  to  the  European  group,  and  that  the  problem  of  how 
the  other  races  are  to  live  in  harmony  with  the  European 
grouj)  without  being  jostled,  and  in  what  way  they  are  to  be 
affected  by  the  European  civilisation,  is  one  of  the  most 
curious  presented  for  the  solution  of  modern  societies.  If 
the  European  numbers  were  less,  the  problem  might  well 
be  whether  European  _  civilisation,  in  spite  of  its  assumed 
superiority  in  type,  could  maintain  itself.  The  numbers  and 
rate  of  increase  being  what  they  are,  it  is  easy  to  see  that 
the  main  problem  resulting  from  the  relations  of  the  European 
and  non-European  races  cannot  be  whether  the  European 
civilisation  will  be  able  to  maintain  itself  by  force,  but  how 
it  will  be  affected  by  its  varying  relations  to  the  other  races. 

Confining  ourselves  again  to  the  European  group,  and  first 
of  all  to  the  nations  within  European  limits,  another  leading 
fact  in  international  politics  is  immediately  suggested  by 
the  statement  of  the  numbers  of  the  people.  This  is  the 
existence  of  five  leading  powers — Russia,  Germany,  Austria, 
France,  and  the  United  Kingdom — each  greatly  stronger 
than  any  of  the  other  powers  not  among  the  five,  except  two ; 
each  big  enough  to  "  take  care  of  itself, "  though  there  are,  of 
course,   differences  of  strength  between  them ;  and  besides 


THE    UTILITY    OP   COMMON    STATISTICS.  28;') 

these,  the  two  others  exceptcil,  viz.,  Italy  and  Spain,  wliich 
come  short  of  a  first  phice,  but  by  a  less  degree  than  the 
minor  States.  All  these  relations  of  the  great  powers  are 
based  largely  on  the  mere  enumeration  of  the  peoples.  Three 
out  of  the  five,  viz.,  France,  Austria-Hungary,  and  tlie 
United  Kingdom,  have  each  aljout  the  same  popidation,  in 
round  numbers,  35  to  38  millions;  one  of  the  others — 
Germany — has  about  one-fourth  more,  and  Russia  only  has 
a  much  larger  number  in  Europe,  viz.,  80  millions.  AVhile 
numbers,  therefore,  are  not  everything,  or  Paissia  would  be 
preponderant,  which  is  notoriously  not  the  case,  and  Germany 
would  not,  as  it  does,  count  for  more  than  in  proportion  to 
its  numbers,  and  the  United  Kingdom  would  not  have  a 
peculiar  position  among  the  others,  on  account  of  tlie  un- 
developed state  of  its  military  resources  on  the  one  side,  and 
the  immensity  of  its  wealth  and  latent  strength  on  the  other 
side,  yet  it  is  obvious  that  the  mere  numbers  are  a  most 
^■ital  element  in  a])prL'ciating  tlie  political  position  of  these 
five  powers  and  the  lesser  powers  around  them.  Perhaps  if 
statesmen  were  always  wise,  and  rulers  and  peoples  free  from 
prejudice  and  passion,  the  popular  knowledge  of  the  figures 
w(juld  be  even  more  serviceable  than  it  is  in  demonstrating 
the  absolute  insanity  of  offensive  war.  It  is  impossible  to 
conceive  what  object  any  of  these  five  great  powers  could 
gain  by  the  misery  and  suffering  of  war  with  another, 
adequate  to  repay  that  misery  and  suffering :  the  very 
magnitude  of  the  wars  forbids  the  possibility  of  gain. 

The  past  history  and  future  prospects  of  the  balance  of 
power  among  these  nations  are  also  illustrated  by  a  mere 
consideration  of  the  numbers.  We  have  only  to  glance  at 
the  population  of  the  different  States  as  at  the  close  of  the 
great  wars  in  1815  and  as  they  are  now,  to  see  that  great 
changes  have  happened : — 


286 


THE   UTILITY   OF   COMMON  STATISTICS. 


1815. 

1880. 

Popul.ition       Per  Cent. 

in                     of 

Millions.           Total. 

Population 

in 

Millions. 

Per  Cent.- 

of 
Total. 

Russia  in  Europe 

Germany  t 

Austria-Hungary 

France 

United  Kingdom 

48 
21 

28 
29 
17 

33 

20 
12 

80* 

45 

38 

37 

35 

34 
19 
i6 
i6 
15 

Total 

143 

lOO 

235              loo 

Thus  in  1815  a  compact  France  possessed  several  millions 
more  than  the  population  of  Germany,  nearly  twice  that  of 
the  United  Kingdom,  and  more  than  half  that  of  Eussia. . 
Austria-Hungary  also  came  near,  as  it  now  does,  to  the 
Trench  numbers.  Now  the  population  of  Germany  consider- 
ably exceeds  that  of  France ;  that  of  the  United  Kingdom  is 
nearly  equal,  and  that  of  Ptussia  is  more  than  double.  These 
facts  correspond  very  closely  with  the  transfer  of  military 
preponderance  on  the  continent  from  France  to  Germany, 
and  with  the  increasing  prominence  of  Eussia,  wliich  would 
probably  be  much  more  felt  but  for  the  simultaneous 
growth  of  Germany.  They  also  explain  why  it  is  that  the 
United  Kingdom,  with  an  economic  and  social  development 
resembling  that  of  France  in  many  respects,  has  fallen  less 
behind  in  the  political  race  ;  why  its  relative  position  among 
European  powers,  though  not  what  it  was  fifty  years  ago,  is 
less  weakened  than  that  of  France  has  been.  Fifty  years 
ago  it  was  the  leader  among  powers  which  were  occupied  in 


*  The  exact  figure  by  the  last  census  is  84  millions,  but  I  have  pre- 
ferred to  be  a  little  under  the  mark,  so  as  to  allow  a  little  for  more 
exact  enumeration  in  the  latter  censuses.  For  the  present  puri^ose- 
the  difference  between  80  and  8i  is  immaterial. 

t  Germany  was  also  much  divided  in  1815. 


THE    UTILITY   OF   COMMON   STATISTICS.  287 

restraining  France,  singly  a  greater  power  tlian  any.  Now 
it  is  abont  eqnal  in  numbers  to  France,  althongli  its  wbolo 
})Osition  is  changed  by  the  fact  that  no  power,  not  even 
Germany,  preponderates  to  the  same  extent  as  France  once 
did. 

As  regards  tlie  future  again,  what  the  figures  suggest 
clearly  is  a  possible  rivalry  between  Piussia  and  Germany, 
and  the  farther  relative  decline  of  Austria  and  France — the 
United  Kingdom  continuing  to  grow,  but  occupying  from 
year  to  year  a  different  place,  as  its  interest  in  the  so-called 
balance  of  power  becomes  less.  Our  change  towards  Europe 
is,  however,  affected  in  part  by  the  growth  of  our  relations 
beyond  seas,  which  is  another  of  the  great  facts  of  population, 
evident  on  the  surface  of  the  figures,  that  I  shall  afterwards 
have  to  notice. 

Of  course  these  changes  ha^e  had  the  effect  of  raising 
fjuestions  of  domestic,  as  well  as  of  foreign,  interest ;  and 
here  again  we  are  indelited  to  statistics  mainly  for  the 
suggestion  of  the  questions.  One  of  these  questions  is,  in 
the  case  of  France,  what  are  the  causes  and  probable  con- 
sequences, socially  and  economically,  as  well  as  in  its 
relations  in  respect  of  the  balance  of  power  to  its  neighbours, 
of  the  stationariness  of  the  population  ?  This  is  one  of  the 
most  remarkable  facts,  both  in  itself  and  in  comparison  with 
the  facts  of  other  countries,  which  population  statistics 
disclose.  The  present  would  not  be  the  place  to  discuss  the 
answer  to  the  (piestions  raised,  or  the  solution  of  the  problems 
involved.  All  I  am  concerned  to  point  out  is  that  it  is  to 
the  common  figures  of  statistics,  such  as  did  not  exist  imtil 
the  present  century,  that  we  owe  the  putting  of  the  questions 
for  answer.  But  for  them  it  would  not  have  been  quite 
certain  whether  the  population  of  France  was  stationary  or 


288  THE    UTILITY    OF    COMMON   STATISTICS. 

not.     Xow  the  facts  are  exactly  known  and.  even  familiar, 
and  discussion  goes  on.     Another  (j^nestion  presented  is  as  to 
the  increase  of  population  in  countries  like  Germany  and 
Eussia,  and  the  rapid  encroachment  there  has  been  on  the 
unused   agricultural   resources  of  those   countries.     As  the 
stationariness  of  the  population  in  France,  however  Leneficial 
in  some  social  aspects,  is  not  an  unmixed  good,  because  it 
weakens  France  in  its  external  political   relations,  so   the 
increase  of  population  in  Germany  and  Paissia,  while  they 
still  remain  mainly  agricultural,  appears  to  be  attended  by 
some  mischiefs.     The  social  condition  of  the  rural  population 
of  Germany  leaves  much  to  be  desired,  as  we  may  see  from 
the  extensive  emigTation,  and  from  the  difficulty  of  increasing 
the  national  revenue.     In  Eussia,  again,  the  threatened  diffi- 
culties   appear  most   formidable.     Until   lately  Eussia  has 
been  largely  in  the  condition  of  a  new  country,  with  vast 
quantities  of  land  over  which  a  growing  agricultural  popula- 
tion could  spread.     Now  the  European  area  is  more  or  less 
filled  up,   and  unless  the  vast  territory  of  Siberia  can  be 
largely  utilised  for  settlement,  which  appears  doubtful,  the 
pressure  of  population  on  the  means  of  subsistence  in  Eussia 
may  soon  become  very  great.     The  soil  may  be  capable  of 
supporting  with  better  agriculture  a  larger  population :  but 
this  is  not  the  point.     The  kind  of  agriculture  possible  in 
any  country  is  related  to  the  existing  capacity  of  the  popu- 
lation, or  to  such  improvements  in  that  capacity  as  are  in 
progress,  and  with  the  Eussian  population  as  it  is,  there  are 
certainly  traces  in  Eussia  of  an  increasing  severity  in  the 
struggle  for  existence,  which  may  at  any  moment  become 
most  serious.     The  change  in  the  conditions  of  expansion  for 
the  population  internally  as  compared  with  what  they  were 
fifty  years  ago  ought  at  any  rate  to  be  recognised  at  the 
present   day,  suggested   as   they  are  by  the  most   obvious 


THE    UTILITY    OF    COMMON    STATISTICS.  289 

statistics  of  Russian  pnpulatioii.  Italy,  it  may  also  be 
noticed,  is  fast  increasing  its  population  without  any  increase 
of  new  soil  or  corresponding  increase  of  manufactures. 

Last  of  all,  another  fact  presented  by  these  obvious  figures 
is  the  dependence  of  the  population  of  the  United  Kingdom 
very  largely,  and  to  a  less  degree  of  France,  Germany, 
Belgium,  and  Holland,  on  the  importations  of  food  from 
abroad.  The  facts  as  to  the  United  Kingdom  have  been 
much  discussed  in  all  their  bearings  lately,  Mr.  Bourne,  as 
we  know  well,  having  taken  a  large  part  in  the  discussions  ; 
but  you  have  only  to  turn  to  the  pages  of  the  "  Statistical 
Abstract  for  Foreign  Countries,"  to  perceive  that  the  United 
Kingdom  is  not  quite  isolated  in  the  matter.  It  is  much 
more  dependent  in  degree  than  any  other  European  country, 
but  in  the  fact  of  dependence  it  is  not  altogether  singular. 
The  fact  is  of  course  partly  due  to  the  increase  of  population 
in  far  greater  ratio  than  the  increase  of  agricultural  production, 
the  prediction  of  Malthus,  that  the  population  of  England 
would  not  be  supported  on  the  soil  of  England  if  it  increased 
at  anything  like  the  rate  in  his  time,  having  thus  been 
verified,  though  not  exactly  as  he  anticipated ;  but  it  is 
also  partly  due  to  an  increase  in  the  consuming  power 
of  the  same  population,  and  the  larger  consumption  of  more 
expensive  kinds  of  food,  requiring  larger  proportionate  areas 
to  produce  them.  France,  with  a  stationary  population, 
increases  its  imports  of  food,  and  the  increased  consumption 
per  head  among  our  own  population  of  the  quantity  of  such 
articles  as  sugar  and  tea  also  suggests  that  articles  of  home 
agricultural  production  are  now  consumed  more  largely  tlian 
they  were  twenty  years  ago  or  more  by  the  same  numbers. 
To  these  two  causes  combined  then,  the  increase  of  popula- 
tion and  increase  of  consuming  power  per  head,  coujded  with 
a  comparatively   stationary   agriculture,   Europe   owes    the 

n.  u 


290  THE   UTILITY    OF   COMMON    STATISTICS. 

unique  phenomenon  of  large  masses  of  population  supported 
by  imports  from  foreign  and  distant  countries.  The  social 
and  political  consequences  of  this  new  fact  must  he  mani- 
fold, and  again  it  is  to  the  common  figures  of  statistics  we 
owe  our  knowledge  of  it.  This  great  fact  would  hardly 
he  known  at  all  if  periodic  censuses  and  the  system  of 
recording  imports  and  exports  had  not  previously  been 
introduced. 

Socially  and  politically  perhaps  the  phenomenon  is  not  yet 
sufficiently  appreciated,  and  as  compared  with  what  it  will 
be,  it  is  probably  only  beginning  to  be  important,  but  it  is 
one  which  must  before  long  play  an  important  part  in  inter- 
national politics  and  in  the  economic  life  of  nations.  Both 
the  countries  whicli  grow  the  surplus  food  and  tlie  countries 
which  receive  it  are  profoundly  concerned. 

In  another  way  the  internal  growth  of  population  in 
different  countries  of  Europe  is  also  connected  with  great 
political  changes.  In  Germany,  for  instance,  it  was  partly 
the  special  growth  of  the  population  under  the  Prussian 
monarchy  Avhich  assisted  to  make  United  Germany.  In 
Eussia,  again,  the  great  growth  of  population  outside  Poland 
]ias,  from  year  to  year,  and  decade  to  decade,  dwarfed  the 
Polish  difficulty  as  a  bare  question  of  the  balance  of  power 
in  Paissia.  But  we  have  even  a  more  striking  case  of 
political  change  from  the  internal  changes  of  population 
nearer  home.  Every  one  must  have  been  struck,  during  the 
last  few  years,  by  the  calmness  of  the  country  generally  in 
presence  of  Irish  agitation,  and  the  evident  hopelessness  of  any 
insurrection  arising  out  of  that  agitation.  When  Mr.  Parnell 
and  other  Irish  Members  were  arrested  in  October  last  year 
[1881],  and  the  Land  League  suppressed,  there  was  hardly 
even  a  fractional  fall  in  consols.     Eorty,  fifty,  eighty  years 


THE    UTILITY    OF   COJDION    STATISTICS.  291 

af,'o,  tliinji^'s  were  entirely  different,  tlie  Irish  difTiculty  beiiiL; 
incessantly  spoken  of  as  most  menacing,  wliicli  indeed  it 
-svas.  The  present  calmness  and  the  former  apprehension  are 
obviously  due  very  much  to  a  mere  cliange  in  population 
numl)ers.  Ireland,  at  the  beginning  of  the  century,  held 
about  one-third  of  the  population  of  the  United  Kingdom ; 
as  late  as  1840  it  still  held  very  nearly  one-third ;  now  its 
population  is  only  one-seventh.  Apart  from  all  relative 
changes  in  the  wealth  of  the  populations,  these  changes  in 
numbers  make  a  vast  difference  in  the  Irish  difficulty.  It 
becomes  easier  for  us  on  the  one  hand  to  bear  the  idea  of  an 
alien  State  like  Ireland  in  our  close  neighbourhood,  wholly 
independent,  or  possessing  Home  Kule  like  the  Isle  of  Man 
or  the  Channel  Islands  :  the  power  of  mischief  of  such  a 
community  is  less  to  be  feared  by  a  State  of  England's- 
gi-eatness  than  was  the  power  of  a  separate  Ireland  fifty  or 
eighty  years  ago,  by  the  England  of  that  time.  A  separate 
Ireland  then  might  have  been  used  by  France  against  the 
very  existence  of  the  English  Empire  and  the  independence 
of  England  itself.  Kow  this  would  hardly  be  possible  either 
to  France  or  to  any  other  State.  On  the  other  hand,  any 
possible  insurrection  in  Ireland  is  as  notliing  to  the  power  of 
the  Ignited  Kingdom  compared  M-ith  what  it  woidd  liave  been 
when  Ireland  held  a  third  of  the  whole  population.  Hence 
the  calmness  of  recent  years  in  comparison  with  the  agitation 
of  a  former  period,  and  Avhich  is  all  the  more  remarkable 
because  the  agitated  mem()ries  survive  and  colour  a  goixl 
deal  of  the  thought  about  the  Irish  difliculty  still.  A  .still 
more  careful  examination  would  show,  I  think,  that  the 
dilHculty  has  diminished  in  intensity — that  it  is  the  alien 
]>art  of  Ireland  wliich  has  most  diminislu'il  in  numbers, 
while  the  loyal  i)art — lUster — has  relatively  increa.sed  ;  l)ut 
here  again  I  wish  to  confine  myself  to  patent  and  obvious 

u  2 


292  THE   UTILITY    OF    COMMON    STATISTICS. 

fiofures,  the  lesson  of  which  has  more  or  less  sunk  into  the 
popular  mind. 

It  is  not  difficult  to  perceive,  moreover,  that  these  changes 
in  figures  must  gradually  tell  more  effectively  than  they 
have  yet  done  on  the  Irish  difficulty.  In  1832  Ireland  was 
endowed  with  one  hundred  and  five  members,  its  proportion 
of  the  population  of  the  United  Kingdom  being  then  one- 
third.  If  one-third  was  then  considered  to  entitle  it  to  one 
hundred  and  five  members,  one-seventh,  it  is  clear,  would 
only  give  it  at  the  present  day  about  forty-five.  Of  these 
forty-five,  again,  one-third  would  be  from  Ulster,  and  almost 
exclusively  among  the  remaining  two-thirds,  or  thirty  in  all, 
if  we  are  to  judge  from  the  present  appearance,  should  we 
find  Home  Rulers.  The  parliamentary  Home  Eule  difficulty 
would  thus  seem  to  liave  largely  arisen  from  tlie  failure  to 
adapt  the  representation  of  the  country  to  changes  in  the 
population.  There  is  certainly  nothing  in  the  increased 
wealth  or  vigour  of  the  Irish  population  compared  with  that 
of  the  rest  of  the  United  Kingdom,  to  suggest  that  Ireland 
should  have  a  larger  representation  in  proportion  to  its 
population  than  it  had  in  1832 ;  yet  if  its  representation 
were  only  to  be  reduced  in  proportion,  the  parliamentary 
difficulty  would  largely  disappear.  Even  if  no  greater 
change  were  now  to  be  made  than  the  introduction  of  equal 
electoral  districts,  and  assuming  that  the  present  changes  in 
population  continue,  and  that  Irish  representation  is  adapted 
to  the  probable  relative  population  of  Ireland  and  the  United 
Kingdom  at  the  next  census,  then  the  representatives  of 
Ireland  in  Parliament  would  be  reduced  from  one  hundred 
and  five  to  eighty-three,  and  of  these  eighty-three  only  fifty- 
five  would  be  sent  from  those  parts  of  Ireland  in  which  there 
is  disaffection,  so  that  the  maximum  number  of  Home  Rulers, 
unless   there  are  great  changes  of  party,  wliich  I  am  not 


THE  UTiLirr  of  common  statistics.  293 

discussing,  wuuld  appan'-iitly  bu  less  tluiu  iilly-five.  ()!' 
course  I  am  not  discussing  the  possibility  or  exi)ediency  of 
any  jmlitical  changes.  1  am  merely  ]i(iiuting  out  the  ideas 
^vllicll  the  figures  on  the  surface  are  suggesting  for  considera- 
tion, and  which  must  affect  the  politics  of  the  next  few 
years.  Here  again  it  is  the  common  figures  of  statistics — 
those  derived  from  the  systematic  record  of  facts  commenced 
within  the  last  century,  and  only  brought  to  a  condition  of 
tolerable  advancement  within  the  last  fifty  years,  whicli  are 
so  fertile  and  suggestive.* 

Still  continuing  the  use  of  the  most  common  statistics  of 
population,  I  propose  next  to  direct  attention  to  one  of  the 
most  formidable  problems  which  have  to  be  dealt  with  by 
our  imperial  government,  and  for  tlie  knowledge  of  wliicli  we 
are  mainly  indel)ted  to  statistics.  I  refer  to  tlie  growth  of 
the  poi)ulation  of  our  great  dependency — India.  I  have 
already  referred  in  the  most  general  terms  to  the  peculiar 
and  complicated  relations  which  are  likely  to  grow  up 
between  nations  of  the  European  family  and  the  races  or 
nations  of  different  types.  At  no  point  are  these  relations 
more  interesting  than  they  are  in  connection  with  the 
supremacy  the  English  race  has  gained  over  the  subject 
races  of  India.  The  point  of  interest  in  these  relations  for 
our  present  purpose  lies,  however,  chiefly  in  this — that  the 
Iloman  ])eace  we  have  established  in  India  ajqicars  to  be 
effective  in  removing  many  obstacles  to  the  growth  of  poini- 
lation  which  formerly  existed — what  ]\Ialthus  described  as 
the  natural  checks — so  that  under  our  rule  the  Indian 
population  is  growing  in  numbers  from  year  to  year,  and 
trenching  with  alarming  lajiidity  on  the  means  of  subsistence. 

*  Sec  postca,  p.  333. 


294  THE    UTILITY    OF    COMMON    STATISTICS. 

I  believe  I  am  ^vitllin  the  mark  in  saying  tliat  there  is  no 
more  anxious  sul)ject  for  the  consideration  of  our  public  men. 
The  late  Mr.  Bagehot  I  know  was  profoundly  impressed  by 
the  fact,  and  repeatedly  wrote  his  impressions,  though  I  do 
not  remember  whether  anything  he  wrote  is  collected  among 
his  published  writings.     Others  of  our  leading  public  men 
and  economists  are  also  deeply  impressed  by  the  fact,  though 
it  is  considered  almost   too   delicate  for  public  discussion. 
There  can  be  no  doubt,  however,  of  the  formidable  nature  of 
the  problem.     India  has  now  on  its  1,400,000  square  miles 
of  territory  a  population  of  240  millions — I  am  dealing  in 
round   figures — or   about   170    to  the  square  mile :  not  an 
excessive  proportion  according  to  formal  comparisons  with 
other  countries,  but  in  reality  leaving  the  people  no  margin. 
It  appears,  from  the  most  careful  studies,  that  whatever  the 
number  of  people  to  the  square  mile,  tliere  is  very  little  new 
and  fertile  soil  to  appropriate  ;  that  much  soil  has  been  so 
appropriated  during  the  last  century  of  our  rule ;  and  that 
the  population  continues  to  grow  fast  without  any  increase 
of  the  land  revenue,  or  any  other  sign  that  land  is  being 
rapidly  taken  into  cultivation — with  signs  on  the  contrary 
of  exhaustion  in  the  agriculture,  and  of  an  approach  to  the 
limits  of  production  according  to  the  means  at  the  disposal 
of  the   population.     So   much   is   more   or   less   accurately 
known  by  statistics  ;  and  of  the  cardinal  fact — the  magnitude 
and  increase  of  the  population — it  is  statistics  from  which 
we  learn  everything.     The  broad  figures   are  here   not   so 
clear  as  they  might  be,  because  improved  methods  in  taking 
the  censuses  have  from  time  to  time  revealed  larger  popula- 
tions than  could  be  accounted  for  by  taking  the  totals  of  one 
previous  census  and  adding  the  probable  or  possible  increase 
of  population  meanwhile ;  but  of  the  actual  fact  of  increase 
between  two  census  periods  there  is  no  doubt,  while  the  rate 


THE    UTILITY    OF    COMMON   STATISTICS.  295 

of  increase,  if  we  are  successful  in  coping  witli  I'aniines,  proves 
to  be  nearly  1  per  cent,  per  annum.  In  ten  years,  therefore, 
there  will  be  20  millions  mure  people  in  India  to  feed  ;  in 
twenty  years  upwards  of  40  millions  more ;  and  the  proljleni 
thus  brouglit  before  the  Indian  Government  is  in  what  way 
and  by  what  means  so  to  develop  the  character  of  the 
people  that  their  industry  may  become  more  efficient  upon 
practically  the  same  soil,  bailing  any  speedy  alteration  in 
the  character  of  the  people,  the  prospect  seems  inevitably  to 
be  that  in  India  from  decade  to  decade  larger  and  larger 
masses  of  the  semi-pauperised  or  wholly  pauperised,  the 
landless  classes,  as  Sir  James  Caird  calls  them  in  the  Famine 
Commission  report,  will  grow  up,  requiring  State  subventions 
to  feed  them,  and  threatening  all  attempts  to  refiaiii  Indian 
finance,  while  raising  social  and  political  difficulties  of  the 
must  dangerous  kind.  It  seems  certain,  then,  that  India  for 
many  years  to  come,  will  be  an  increasingly  dangerous 
problem  fur  our  statesmen  tu  deal  with — the  mure  dangerous 
perhaps  because  any  change  in  the  character  of  the  people, 
bringing  with  it  increased  energy  of  production  and  increased 
strength  of  character  altogether,  will  also  bring  with  it 
a  rise  in  the  scale  of  living,  tending  tu  make  the  masses 
discontented  instead  of  submissive  to  their  lot.  Whate\-er 
course  events  may  take,  our  rule  in  India  must  apparently 
for  generations  become  a  problem  of  increasing  difficulty  and 
complexity.  The  proljlem  is  analogous  to  what  seems  to  lie 
before  a  government  like  that  of  Paissia,  witli  this  difference, 
that  the  government  is  in  Ilussia  a  native  iustitutiun,  whereas 
in  India  it  is  that  of  an  alien  nation  governing  a  host  of 
subject  races. 

I  shall  be  told,  perhaps,  that  if  stali.sties  suggest  problems 
like  this,  they  are  only  making  us  uncumf'urlable  before  the 
time :  the  evils  apprehended  are  purely  speculative.     But  in 


296  THE    UTILITY    OF    COMMON   STATISTICS. 

the  case  of  India  this  cannot  be  said.  The  actual  creation 
of  a  famine  fund  is  a  proof  that  the  evil  is  imminent.  The 
fund  is  created  in  order  to  secure  that  large  numbers  of 
people  are  kept  alive  in  times  of  famine,  millions  being  in 
this  way  semi-pauperised.  The  prospect  is  that  before  long 
there  may  be  millions  to  be  kept  alive  in  non-famine  and 
famine  years  alike,  people  without  land  or  means  of  living, 
and  without  the  possibility  of  being  employed  as  labourers. 
Thus  the  difference  between  the  present  condition  of  things 
and  what  seems  imminent,  unless,  as  I  have  stated,  there  is 
an  unlooked-for  change  in  the  character  of  the  people,  is  one 
not  of  kind  but  of  degree.  The  statistics  only  bring  to  light 
and  set  out  an  immediate  difficulty.  The  solution  at  present 
devised  of  a  famine  fund  by  which  millions  of  the  Indian 
people  are  virtually  pauperised  is  certainly  not  one  to  be  con- 
templated with  any  satisfaction.  It  may  be  unavoidable,  but 
from  the  point  of  view  of  civilisation  and  progress  it  is  little 
more  than  a  confession  of  the  hopelessness  of  the  difficulty. 

The  last  broad  fact  I  shall  refer  to  as  presented  and  made 
familiar  to  us  by  these  statistics  of  population,  is  that  of 
the  growth  of  population  in  the  United  States — a  subject, 
perhaps,  of  even  greater  interest  than  any  I  have  yet 
referred  to,  and  complicated  also  with  one  or  two  interesting 
questions  already  glanced  at,  viz.,  the  existence  and  increase 
of  large  European  populations  Avhich  are  supported  by 
imports  of  food  from  new  countries,  and  mainly  from  the 
United  States.  In  this  case  I  may  have  to  make  some  use 
in  passing,  not  merely  of  common  and  familiar  figures,  but 
of  a  few  less  generally  known  ;  but  I  shall  use  none  except 
what  are  easily  accessible,  and  in  all  cases  the  ideas  to  be  pre- 
sented will  1)0  those  suggested  by  what  is  common  and  familiar. 

The  broad  fact  presented  by  the  United  States  is  that  of 


THE    UTILITY    OF    COjniOX    STATISTICS.  297 

the  doubling  of  the  populaLiou  in  })uriod.s  of  about  twenty- 
five  years.  There  is  a  little  doubt  about  the  exact  population 
at  the  time  of  the  "War  (»f  Independence,  and  down  to  the 
first  census  at  the  beginning  of  the  present  century,  but  for 
the  present  purpose  the  figures  we  get  are  good  enough : — 

111  Milns. 

1780 3-0 

'90 4-0 

ISOO 5"3 

'10 rz 

'20 9-6 

'30 12-9 

'40 I7-I 

'50 23-2 

'60 31-4 

70 •  3«-5 

'80 50-I 


In  other  words,  the  popuhition  of  the  United  States  has 
multiplied  itself  by  sixteen  in  the  course  of  the  century — this 
l)eing  the  result  of  its  doubling  itself  every  twenty-five  years 
for  that  period.  In  another  twenty-five  years,  at  the  same 
rate  of  increase,  the  population  will  be  100  millions,  in  fifty 
years  200  millions,  in  seventy-five  years  400  millions,  and  at 
the  end  of  a  century  8U0  millions  !  Such  is  the  first  aspect 
of  the  broad  fact  presented  to  our  consideration  by  the 
increase  of  population  in  the  United  States.  The  rate  is 
such  as  to  be  fairly  liewildering  in  its  probalde  consequences. 
The  ])henonienon  is  also  without  a  ja'ccedcut  in  history. 
Tliere  has  been  no  such  increase  of  population  anywhere  on 
a  similar  scale,  and  above  all  no  such  increase  of  a  highly 
civilised  and  richly  fed  population.  The  increase  is  not  only 
unprecedented  in  mere  numbers,  but  it  is  an  increase  of  the 
most  expensively  living  population  that  has  ever  been  in  the 
world.     For  the  idea  of  such  an  increase  we  are  indebted 


298  THE    UTILITY   OF   COIMMON   STATISTICS. 

exclusively  to  statistics.  The  United  States,  among  the 
other  new  ideas  of  old  civilisations  they  have  had  the  benefit 
of,  have  had  the  idea  of  a  periodical  census,  which  is  even 
made  a  part  of  their  constitution,  and  as  the  result  we  have 
before  us,  not  only  in  a  general  way,  but  with  some 
precision,  so  that  discussion  may  have  an  assured  basis,  this 
phenomenon  of  an  unprecedented  increase  of  population 
which  is  perhaps  the  greatest  political  and  economic  fact  of 
the  age. 

The  fact  has  altered  in  the  first  place  the  whole  idea  of 
the  balance  of  power  of  the  European  nations.  A  century 
ago  the  European  nations  in  their  political  relations  thought 
little  but  of  each  otlier.  Now  the  idea  of  a  new  Europe  on 
the  other  side  of  the  Atlantic  affects  every  speculation, 
however  much  the  new  people  keep  themselves  aloof  from 
European  politics.  The  horizon  has  been  enlarged,  as  it 
were,  and  the  mere  fact  of  the  United  States  dwarfs  and,  I 
think,  restrains  the  rivalries  at  home.  European  Govern- 
ments can  no  longer  have  the  notion  that  they  are  playing 
the  first  part  on  the  stage  of  the  world's  political  history. 
And  this  sense  of  being  dwarfed  will  probably  increase  in 
time.  In  this  country,  at  any  rate,  we  cannot  but  feel 
greatly  attracted  by  the  United  States.  Because  of  the 
magnitude  of  that  country,  the  European  continent  is  less  to 
us — our  relations  are  elsewhere. 

It  is  in  connection,  however,  with  our  own  home  problems 
of  population  that  the  increase  of  the  United  States  is  most 
interesting  to  us.  Tlie  increase  is  partly  at  our  expense,  and 
at  that  of  the  other  European  nations.  If  the  United  States 
or  some  other  new  country  had  not  received  our  emigrants, 
it  is  quite  clear  that  our  whole  history  would  have  been 
different  from  what  it  is.  We  sliould  either  have  had  in  our 
midst   the   people   wliu    emigrated,    and   their   descendants, 


THE    UTILITY    OF   COMMON    STATISTICS. 


299 


straining  tlie  resources  of  our  soil  luul  mines  and  capital,  or 
the  pressure  \ipon  these  resources  would  have  checked  in 
various  ways  the  growth  of  the  population  itself,  so  that 
l)rol)ably  at  this,  moment,  but  for  the  new  countries,  more 
])eople  would  now  he  living  in  the  United  Kingdom  than 
there  are,  and  larger  numbers  of  the  population  would  be 
])aupers,  or  on  the  verge  of  paui)erism.  The  actual  numbers 
we  have  lost  altogether,  and  specially  to  the  United  States, 
have  been : — 


To  UuiteJ  States. 


Before  1820 
1820-30 

'30-40 

'40-50 

'51-52* 

'53-GO 

'60-70 

70-80 

Total 


50,000 

100,000 

308,000 

1,094,000 

511,000 

805,000 

1,132,000 

1,087,000 


Altogether. 


123,000 

247,000 

703,000 

1,684,000 

704,000 

1,312,000 

1,571,000 

1,678,000 


5,087,000 


8,022,000 


Some  correction  of  these  iigures  would  be  necessary  in  the 
earlier  years  for  foreigners  included,  and  in  the  later  years 
for  persons  returning  home,  but  the  correction  in  the  present 
view  would  ]nal<e  no  material  diffcrence.  If  these  people 
had  not  emigrated,  and  had  increased  as  the  rest  of  the 
l)opulation  has  done  at  home,  the  existing  population  in  the 
United  Kingdom  would  now  be  many  millions  more  than  it 
is.  The  dillerence  made  by  tlie  emigration  to  the  United 
States  alone  must  be  a  good  many  millions. 

The  influence  of  the  United  States  and  other  new  countries 
has  been  gi-eater  still.  On  a  rough  calculation  about  12 
millions  at  least  of  the  people  of  the   United  Kingdom  live 


•  Previous  to  this  date  the  figures  include  foreigners. 


300  THE    UTILITY   OF   COMMON   STATISTICS. 

on  imported  food,  and  a  certain  part  of  the  populations  of 
Germany,  France,  Belgium,  and  Holland  also  live  on  im- 
jx)rted  food — the  importations  being  mainly  from  the  United 
States.  These  new  countries  therefore  not  only  have  per- 
mitted an  increase  of  population  in  a  century,  till  it  is 
sixteen  times  the  population  at  starting,  but  a  much  larger 
increase.  To  take  the  United  States  alone,  we  cannot  esti- 
mate its  contribution  to  the  support  of  foreign  populations 
at  less  than  an  amount  equal  to  the  support  of  a  population 
of  10  millions,  similar  in  character  to  that  of  the  United 
Kingdom.  Its  exports  of  bread-stuffs  and  provisions  are 
now  about  90  million  pounds  annually,  at  the  value  as  they 
leave  the  United  States  ;  and  at  £9  per  head,  corresponding 
approximately  to  a  value  in  the  United  Kingdom  of  £11 
per  head,  which  is  about  our  consumption  of  agricultural 
products  per  head,  this  would  be  equal  to  the  support  of  10 
million  persons.  In  other  words,  then,  the  United  States, 
from  supporting  3  millions  of  people  a  century  ago,  are  now 
supporting  at  least  60  millions — virtually  an  increase  of 
twenty  times  the  original  number.  The  growth  of  popula- 
tion thus  becomes  more  astonishing  than  ever.  Altogether 
there  must  be  about  15  millions  of  people  in  Europe 
supported  by  the  produce  of  the  new  countries  ;  and  adding 
together  the  populations  of  Canada,  Australia,  and  the 
United  States  to  this  15  millions,  less  a  deduction  for  the 
population  in  these  countries  a  century  ago,  there  remains  a 
total  of  about  70  millions  of  European  population,*  or  about 


*  To  make  these  figures  quite  exact,  a  correction  ought  to  be  made 
on  account  of  the  non-Enroiiean  element  in  the  population  of  the 
United  States,  the  coloured  population  in  1880  being  about  62  millions. 
The  coloured  population  in  the  United  States,  however,  is  brought 
into  competition  with  the  Euroiiean,  and  in  some  degree  Europeanised. 
It  seems  unnecessary,  therefore,  for  our  jiresent  purjiose  to  make  any 
correction. 


THE    I'TILITY    01''    COMMON    STATISTICS.  PjOI 

oiie-liftli  of  the  |)(»])ulati(in  now  li\iiig  in  Juu()])e,  which  is 
supported  hy  the  pro(hice  of  newly  opened  regions.  The 
history  of  Europe  we  may  M-ell  say  would  have  been  entirely 
different  from  what  it  has  been  during  the  last  century  but 
for  the  new  countries.  It  is  ditllcult  indeed  to  over-estimate 
the  exte'nt  to  which  the  existence  of  a  new  field  for  population, 
sucli  as  the  United  States  presents,  has  dominated  the  recent 
economic  history  of  Europe.  We  are  so  accustomed  to  a  set 
of  economic  circumstances  in  which  population,  constantly 
increasing  in  numbers  arid  in  the  capacity  for  food  con- 
sumption per  head,  finds  practically  unlimited  means  of 
ex])ansion,  that  we  can  hardly  understand  economists  like 
]\ralthus  who  w^ere  oppressed  by  the  only  too  evident  limits 
which  nature,  at  the  time  he  wrote,  had  apparently  set. 

It  seems  impossible,  however,  not  to  see  that  a  period  in 
which  the  pressure  of  limits  to  growth  and  expansion  may 
again  be  felt  is  not  far  off.  The  approach  of  such  a  ])eriod 
seems  to  me  to  be  suggested  by  the  ligures  which  are  on  the 
surface,  and  I  may  perhaps  be  permitted  to  anticipate  that 
the  idea  of  such  an  approach,  if  it  is  not  now,  Mill  soon 
become  a  familiar  subject  for  speculation. 

The  very  language  in  wliic-h  reference  has  been  made  to 
the  increase  of  population  in  the  United  States  itself,  viz.,  that 
the  present  rate  of  increase  implies  twenty-five  years  hence 
a  population  of  100  millions,  a  hundred  years  hence  a  popu- 
lation of  800  millions,  indicates  that  a  continuance  of  this 
rate  of  increase  may  be  considered  incredible.  It  implies 
future  changes  in  the  industrial  power  of  the  race  wliich  we 
have  no  warrant  to  anticipate.  The  area  of  the  United 
States,  exclusive  of  Alaska,  which  does  not  count,  is  0 
million  square  miles,  and  of  this  area  there  are  at  least 
1  million  square  miles,  if  not  more,  which  are  sterile  or 
rainless,  so  that  cultivation,  so  far  as  we  can  now  foresee,  is 


302  THE    UTILITY    OF   COMMON    STATISTICS. 

out  of  the  question.     There  remain  then  2  million  square 
miles,  and  on  this  area  a  population  of  800  millions  would 
give  400  to  the  square  mile — one-third  as  much  again  as  the 
present  population  per  square  mile  in  the  United  Kingdom, 
twice  as  much  i)er  square  mile    as  the  population   of  the 
United  Kingdom  which  is  supported  by  the  home  agriculture, 
and  more  than  twice  as  much  per  square  mile  as  the  present 
population  of  France.     Allowing  for  the  greater  consuming 
power  of  people  in  the  United  States  as  compared  with  that 
of  the  French  people,  this  is  as  much  as  to  say  that  a  rate  of 
increase  of  population  like  what  has  been  going  on  in  the 
United  States  for  a  century  is  impossible  in  the  next  century, 
unless  the  power  of  the  human  race  to  extract  food  from  the 
soil  is  enormously  increased.     No  doubt  the  United  States 
may  lose  in  each  decade  that  special  force  of  addition  to  its 
rate  of  increase  due  to  immigration.     As  its  own  population 
increases,  the  proportion  of  the  area  from  which  immigrants 
are  drawn  will  diminish,  and  hence  there  is  apparent  reason 
to  anticipate  that  the  proportion  of  the  immigration  itself 
will   diminish.      But  at  present  there  is  hardly  a   sign  of 
change  in  the  proportion  of  the  immigration,  and  for  some 
time  to  come  at  least  no  material  difference  seems  likely 
from  this  cause  in  the  rate  of  increase  of  the  United  States 
population.     The  increase  of  population  between  1870  and 
1880  was  almost  at  as  great  a  rate  as  any  that  has  occurred. 
Besides,  it  does  not  follow  that  the  diminution  of  the  area 
from   which   immigrants  are   drawn    should   diminish    the 
immigration  itself.     Other  things  being  equal,  a  larger  and 
larger  share  of  the  increasing  population  of  older  countries 
will  emigrate,  and  if  they  do  not  emigrate  they  will  have  to 
be  supported  by  the  import  of  food  from   new  countries, 
which  comes  to  the  same  thing.     Moreover,  a  much  smaller 
increase  in  the  United  States  than  we  have  supposed,  say  to 


THE    UTILITY    OF    COMMON    STATISTICS.  303 

400  millions  only  in  a  century,  ^\■oul^l  presnpi)OSC  practically 
so  violent  a  change  in  existing  economic  conditions,  that  the 
difference  between  it  and  the  more  violent  change  which  an 
increase  of  population  to  the  larger  figure  would  require  need 
not  be  considered. 

The  bare  statement  of  such  figures  appears  to  me  ({uite 
enough  to  indicate  that  the  present  economic  circumstances 
of  the  European  family  of  nations,  including  the  United 
States  as  an  offshoot  and  part  of  the  family,  are  not  likely  to 
continue  for  more  than  a  generation  or  two.  We  are  within 
measurable  distance  of  very  great  changes.  No  doubt  there 
are  other  new  lands — in  Australia,  in  Canada,  at  the  Cape, 
and  elsewhere — which  will  be  more  or  less  availaljle  in  the 
future ;  but,  singly,  the  United  States  is  so  much  the  larger 
field,  that  the  influence  of  these  other  new  lands  need  not  be 
considered.  Assuming  the  United  States  to  possess  only 
half  the  area  of  new  country  available  for  the  European 
races,  a  single  doubling  of  the  population,  after  the  United 
States  has  been  filled  up — the  work  of  a  generation  or  two — 
would  absorl)  all  these  other  new  lands ;  their  existence  only 
l)Ostpones  the  date  when  they  will  all  be  in  the  position 
calculated  for  America  alone  at  the  end  of  a  century  by 
thirty  years  or  so.  In  the  course  of  a  century,  then,  we 
may  affirm  that  the  present  economic  circumstances  of  the 
European  races  which  make  possible  an  indefinite  exjjansion 
of  the  numbers  of  the  people,  coupled  wiili  an  increase  of 
their  consuming  power,  will  have  entirely  changed. 

The  fiicts  appear  to  me  so  interesting,  that  I  ask  leave  to 
add  something  more,  though  the  figures  I  have  now  to  give 
you,  while  easily  accessible,  are  not  ipiite  so  much  on  the 
surface,  and  have  not  been  jiopularised.  These  figures  relate 
to  the  actual  ai)propriation  of  land  for  settlement,  and  the 
actual  growth   of  population   in   the   new  and   old   States 


304  THE    UTILITY    OF    COMMON   STATISTICS. 

respectively.  What  I  wish  to  briug  out  is  that  a  much 
larger  portion  of  the  available  area  of  the  United  States  has 
been  "  taken  for  settlement "  than  is  commonly  imagined ; 
that  in  fact  not  only  the  thirteen  original  States  and  their 
three  sub-sections  have  been  so  taken  for  settlement,  but 
what  are  known  as  the  Western  States,  exclusive  of  the 
Pacific  territories,  have  also  been  taken  for  settlement ;  that 
the  growth  of  rural  population  in  this  second  group  of  States 
has  now  brought  them  nearly  to  the  level  of  the  rural 
population  in  the  older  States ;  that  there  is  no  longer  much 
room  for  growth  by  taking  up  new  lands  in  all  these  portions 
of  the  States ;  that  the  remaining  available  area  is  so  small 
a,s  to  render  inevitable  its  being  taken  for  settlement  before 
very  long ;  and  that  from  this  point,  probably  within  twenty 
or  thirty  years,  the  new  economic  circumstances  I  have  been 
referring  to  must  begin  to  make  themselves  felt. 

The  total  area  of  the  United  States,  according  to  the  last 
census,  exclusive  of  Alaska,  is  given  as  3,025,600  square 
miles,  of  which  there  is  a  land  surface  of  2,970,000  square 
miles.  Of  this  the  portion  belonging  to  each  of  the  three 
groups  named,  with  the  quantities  of  each  respectively  taken 
for  settlement,  is  as  follows,  the  figures  being  worked  out 
from  the  data  of  area  and  population  as  given  by  the  last 
census : — 


THE    UTILITY    OF    COMMON    STATISTICS. 


305 


Area  of  United   States   and   Area  tahcn  for  Settlement,  in 
Three  Groups. 


,.,      ,    ,  .           Aroa  taken  for 
Settlement. 

Group  I. 
Thirteen  to  sixteen  original  States  .. 

Group  II. 
Twelve  Western  and  Southern  States*  .. 

Group  III, 
Eemaininp:  States  and  Territories— 

«.  Six  Far  West  States  t       

h.  Pacific  States  and  Territories  \ 

Square  miles. 

393,000 
005,000 

620,000 
•1,407,000 

Square  miles. 
362,000 

560,000 

370,000 
277,000 

Total  of  Group  III 

2,027,000     i       647,000 

Grand  Total         

3,025,000     :     1,569,000 

*  Viz.,  Kentuckj^  Tennessee,  Ohio,  Indiana,  Illinois,  IMichigan, 
Missouri,  Arkansas,  Louisiana,  ]\Iississippi,  Alabauaa,  and  Florida. 

t  Viz.,  Iowa,  Wisconsin,  Minnesota,  Kansas,  Nebraska,  and  Texas. 

X  Viz.,  California,  Oregon,  Dakota,  Colorado,  Nevada,  Arizona, 
Idaho,  Montana,  Wyoming,  Utah,  New  Mexico,  Washington. 


Thus  out  of  the  total  area  of  3  million  (jdd  square  miles, 
rather  more  than  one-half  is  the  area  taken  for  settlement ; 
and  the  area  not  for  settlement  is  almost  exclusively  in  the 
last  group  of  all.  This  group  I  have  subdivided  in  two 
sections,  the  first  comprising  States  like  Iowa  and  Minnesota, 
more  or  less  completely  settled,  and  the  second  comprising 
the  Pacific  »Statcs  and  Territories  ;  and  of  the  first  subsection 
it  will  be  observed  more  than  half  is  already  included  in  the 
area  taken  for  settlement.  The  question  then  arises — How 
nuich  of  the  unsettled  portion  is  available  for  settlement  ? 
and  to  this  the  answer  must  be,  little.  Wlicn  I  mention 
that   Mr.  Porter,  a  well-known  American   statistician,  and 

II.  X 


)06 


THE    UTILITY    OF   COMMON   STATISTICS. 


one  of  the  Tariff  Commission  now  sitting,  in  liis  book  on 
"  The  West,"  estimates  that  there  are  1,400,000  square  miles 
of  territory  in  the  west,  of  which  only  a  tithe  will  ever  be 
available  for  cultivation,  it  will  be  seen  that  the  wholly 
unoccupied  portion  of  the  available  territory  must  now  be 
reduced  to  very  small  dimensions. 

The  next  point  to  which  I  wish  to  draw  attention  is  the 
actual  population  of  the  first  two  groups,  exclusive  of  the 
town  population,  and  the  proportion  to  the  square  mile. 
Tliis  figure  I  work  out  from  the  tables  at  pp.  26-31  of  the 
Introduction  to  the  Population  Statistics  of  the  United 
States  Census : — 


Net  Rural  Population  of  the  United  States,  exclusive  of  the 
Town  Pojndation,  in  different  Groups  of  States,  with  tlie 
Numlcrs  per  Square  Mile. 


Total 
Population. 

Town 
Population. 

Net  Rural 
Pojiulation. 

Number  per 
Square  Wile 

of  Rural 
Population. 

Group  I 

„    n 

„    Ill.r^        ..        .. 
„    lll.h        ..        .. 

21,835,111 
19,656,666 

6,761,132 

1,902,874 

7,939,334 
3,614,835 

847,282 
534,659 

13,895,777 
16,041,831 

5,913,850 
1,368,215 

35 

I 

Total  of  III... 

8,664,006 

1,381,941 

7,282,065 

— 

Grand  Total  .. 

50,155,783 

12,936,110 

37,219,673          72 

Thus  while  the  rural  population  in  the  thirteen  original 
States  is  35  per  square  mile,  it  amounts  to  no  less  than 
20^  per  square  mile  in  twelve  other  States  which  we  are 
accustomed  to  speak  of  as  more  or  less  unoccupied.     This  is 


THE    UTILITY    OF   COMMON   STATISTICS.  307 

clearly  not  the  case.  An  addition  of  8^  per  square  mile,  or 
of  little  more  than  5  millions  in  all,  would  make  them  as 
populous  as  the  rural  parts  of  the  original  States.  Group  lll.a, 
though  it  has  a  larger  area  to  fill  up,  would  nevertheless 
become  as  populous  per  square  mile  rurally  as  the  older 
group  of  States  by  an  addition  of  about  15  millions  of  popu- 
lation. It  appears,  however,  that  a  large  part  of  this  area 
belongs  to  the  rainless  region ;  so  that  probably  less  than 
two-thirds  of  this  15  millions  would  fill  up  the  available  area 
to  the  limit  of  the  thirteen  original  States.  There  remains 
only  the  last  division  of  all ;  but  it  would  seem  that  the 
available  area  here  cannot  be  jmt  at  more  than  400,0(10 
square  miles,  on  which  the  present  rural  population  would 
be  about  3  per  square  mile ;  so  that  if  the  population  grows 
to  the  limit  of  the  older  States,  the  addition  to  the  population 
necessary  would  be  about  10  to  12  millions  only.  Altogether 
an  addition  of  about  20  to  25  millions  to  the  rural  popu- 
lation of  the  United  States*  would  seem  all  that  is  required 
to  occupy  the  available  area  in  the  same  way  that  the 
oldest  and  most  settled  part  is  now^  occupied.  "When  that 
point  is  reached,  the  present  conditions  of  expansion  must 
begin  to  change. 

How  long  will  it  be  till  the  point  is  reached  ?  Some 
idea  of  this  may  l)e  formed  from  a  comparison  of  the  increase 
of  the  total  population  with  the  increase  of  the  city  popula- 
tion. This  is  shown  in  a  table  at  p.  29  of  the  Introduction 
to  the  Population  Statistics  of  the  Census,  already  leferred 
to,  from  which  it  appears  that  the  total  jxjpulatioii  increased 
nearly  12  millions  in  the  last  census  period,  and  the  urban 
population  nearly  SJ^  millions,  so  that  the  rural  population 

*  Viz.,  5  millions  to  second  group,  10  millions  to  Group  Ill.n,  and 
10  millions  to  Group  111.6. 

X  2 


508 


THE    UTILITY    OF    COMMON   STATISTICS. 


increased  8^  millions.*  Of  course  it  may  be  urged  that  the 
rural  population  may  have  increased  in  the  older  parts  of 
the  country  as  well  as  the  new,  but  it  is  interesting  to 
observe  how  much  of  the  absolute  increase  of  population  is 
in  the  second  and  third  groups,  and  not  in  the  first.  This  is 
shown  in  the  table  on  the  next  page,  extracted  from  the 
"  Introduction  to  the  United  States  Census." 


*  The  following  is  a  copy  of  the  figures  here  referred  to,  the  urban 
population  here  accounted  for,  however,  being  somewhat  less  than 
above  stated,  which  includes  towns  of  a  smaller  size  than  are  reckoned 
in  this  comparative  table  : — 


Numher  of  Total  Population  of  United  States  at  each  Census,  and  Kuniher 
of  Urban  Population,  ivith  the  Proportion  of  the  Urban  to  the  Total. 


Population 

Population 

Inhabitants  of 

Date. 

of 

of 

Cities  to  each  Hundred 

United  States. 

Cities. 

of  Total  Population. 

1790 

3,929,214 

131,472 

3-3 

1800 

5,308,48^ 

210,873 

3*9 

'10 

7,239,881 

356,920 

4-9 

'20 

9>633,822 

475,135 

4-9 

'30 

12,866,020 

864,509 

6-7 

'40 

17,069,453 

1,453,994 

8-5 

'50 

23,191,876 

2,897,586 

12-5 

'60 

31,443,321 

5,072,256 

i6-i 

70 

3^,558,371 

8,071,875 

20-7 

'80 

50,155,783 

11,318,547 

22-5 

THE    UTILITY    OF    COMMON   STATISTICS. 


309 


Population  and  Number  of  I)ihahit(Uits  per  Square  Mile  in 
each  of  Three  Groups  in  the  United  States  at  the  Date  of 
caeh  Census* 


First  Group. 

Second 

Group. 

Third  Group. 

Averagt 

Average 

Average 

Density 

Density 

Density 

Date.    I'opulation. 

(Persons 

Topulatiou. 

(Persons 

Population. 

(Persons 

to  a  Square 

to  a  Square 

to  a  Square 

Mile). 

Mile). 

Mile). 

1790  3,819,8-16 

17-0 

109,368 

7-2 

18001  4,92-2.070 

i8-5 

386,413 

9-8 

,  ^ 

■    • 

'10  6,161,566 

20 '6 

1,078,315 

9-8 

,    , 

'20   7,417,432 

23-8 

2,216,390 

11-3 

'30   9,158,721 

26-3 

3,707,299 

13-1 

.  . 

'40  10,638,004 
'50 13,218,496 

30-1 

6,357,392 

14-5 

74,057 

4-7 

36-7 

9,078,288 

i8-4 

895,092 

7-1 

'6o|l5,818,547 

43-« 

12,637,882 

24"3 

2,968,892 

9"5 

'70: 17,964,592 

50-1 

15,594,721 

29-5 

4,999,058 

12-9 

'8o'21,835,lll 

60  "3 

19,656,666 

35-1 

8,664,006 

i3"4 

Thus  in  the  last  decade  about  4  millions  of  tlio  total 
increase  of  population  is  in  the  second  group,  and  3,700,000 
in  the  last  group.  At  this  rate,  clearly,  the  increase  of 
population  in  the  second  group  in  ten  years  from  1880,  if  all 
agricultural,  would  be  such  as  nearly  to  fill  uj)  tlio  country 
with  a  rural  population  to  the  level  of  the  older  States, 
while  the  same  increase  would  go  a  very  long  way  towards 
filling  up  the  last  group  in  the  same  way.  But  the  speed 
with  whicli  the  vacuum  will  be  filled  will  probably  be  even 
greater.  The  population  in  the  new  regions  grows  at  an 
increasing  rate  as  regards  amounts.  In  1840  the  population 
in  the  thii-d  group  was  about  74,000  only ;  in  1850  it  had 
increased  by  rather  more  than  800,000  ;  by  1800  there  hud 


*  To  prevent  misunderstanding,  it  should  be  noted  that  the  figuns 
jior  square  mile  in  this  table  refer  to  the  whole  population,  whereas  in 
the  table  on  p.  306,  the  figures  relate  to  the  rural  population  only. 


310  THE    UTILITY    OF   COMMON   STATISTICS. 

been  a  further  increase  of  2  millions ;  by  1870  there  had 
been  another  addition  of  2  millions ;  and  between  1870  and 
1880  there  is  an  addition  of  nearly  4  millions.  Thus  only 
in  one  decennial  period,  viz.,  between  1860  and  1870,  is  the 
increase  less  than  about  double  what  it  had  been  in  the 
previous  decennial  period.  The  increase  of  population  in 
this  new  region  at  the  past  rate  would  therefore  be,  not  4 
millions,  but  8  millions,  or  about  half  what  is  required  to  fill 
up  the  region  with  a  rural  population  to  the  level  of  the 
thirteen  original  States.  By  1890,  therefore,  not  only  will 
the  second  group  of  States  very  probably  be  filled  up  to  the 
level  of  the  thirteen  original  States,  but  the  work  of  filling 
up  the  last  group  of  all  will  have  advanced  very  nearly 
towards  completion.  In  another  ten  years,  that  is  by  1900, 
assuming  the  same  progressive  rate  of  increase,  the  addition 
to  the  population  in  the  last  group  of  all  would  be  16 
millions,  wdiich  would  be  far  more  than  sufficient  to  fill  up 
the  vacuum. 

There  is  still  another  w^ay  of  looking  at  the  matter. 
During  the  decennial  period  1870-80,  the  increase  of 
population  in  the  United  States  was  about  equally  dis- 
tributed between  the  three  groups — about  4  millions  to  each, 
the  increase  in  the  first  group  being,  however,  mainly  in  the 
cities.  Assuming  an  equal  division  of  the  50  millions 
additional  population  which  will  be  on  tlie  territory  of  the 
United  States  in  twenty-five  years — and  it  is  more  likely 
that  the  Western  States  will  have  a  larger  proportionate 
share — this  would  give  16  millions  more  to  the  second  group, 
or  11  millions  more  than  is  necessary  to  fill  up  the  rural 
districts  to  the  level  of  the  Eastern  States,  and  16  millions 
to  the  third  group,  wliich  w^ould  sufiice  to  fill  the  rural 
districts  to  the  Eastern  level.  Even  looking  at  the  matter 
in  this  way,  then,  the  prospect  is  that  the  available  area  in 


THK    UTILITY    OF   COMMON    STATISTICS.  311 

the  United  States  will  be  peopled  up  to  the  level  of  the 
tliirteen  original  States,  as  regards  the  rural  population,  in 
the  course  of  twenty -five  years.  Ikit  the  distribution  of  the 
increase  between  the  groups,  as  I  have  said,  is  likely  to  be 
unequal,  and  the  West  will  probably  be  filled  up  with  even 
greater  rapidity.  To  look  at  tlie  matter  in  yet  another 
aspect :  of  the  50  millions  additional  population,  assuming 
an  increase  of  the  town  population  like  what  has  been  going 
on  in  the  past,  about  12  millions  will  be  a  town  population, 
leaving  38  millions  as  the  rural  increase.  But  unless  rural 
]iopulation  is  to  increase  in  the  original  States,  and  is  also 
to  increase  in  the  second  group  to  more  than  the  present 
level  of  the  original  States,  the  whole  of  this  38  millions, 
except  the  5  millions  required  for  the  growth  of  rural 
])opulation  in  the  second  group  to  the  level  of  the  original 
States,  w'ill  be  left  for  the  occupation  of  the  available  area  in 
the  third  group,  or  double  what  is  required.  Whatever  way 
we  look  at  the  matter  then,  it  seems  certain  that  in  twenty- 
five  years'  time,  and  i)rubably  before  that  date,  tlie  limitation 
of  area  in  the  United  States  will  be  felt.  There  will  be  no 
longer  vast  tracts  of  virgin  land  for  the  settler.  The  whole 
available  area  will  be  peopled  agriculturally,  as  the  Eastern 
States  are  now  peopled.* 

All  this  must  involve  a  great  change  in  the  conditions  of 

*  These  various  calculations  may  be  put  more  shortly  still.  As- 
siuuiiig  the  available  area  for  settlement  to  be  altogether  '2  million 
sciuarc  miles — and  it  seems  not  quite  so  much — this  would  absorb 
altogether,  at  35  per  square  mile,  a  rural  poimlation  of  70  millions. 
^Vith  that  number  the  entire  availa1)le  area  of  the  United  States  would 
have  as  thickly  settled  a  rural  population  as  the  thirteen  original 
Stati'S  now  have.  But  the  present  rural  population  being  over  37 
millions,  only  33  millions  more  at  the  outside  are  needed  to  till  up  the 
available  area  to  the  level  of  the  Eastern  States,  or  less  than  the 
estimated  addition  to  the  rural  population  at  the  jircscnt  rate  of 
increase  in  the  next  twenty-five  years. 


312  THE   UTILITY   OF    COMMON   STATISTICS. 

the  growth  of  population  and  the  general  economic  conditions 
of  the  country.  It  confirms  in  the  most  ample  manner  what 
was  to  be  surmised  from  the  bare  statement  of  the  geometric 
increase  of  population  itself,  pointing  as  it  did  to  a  population 
of  800  millions  at  the  end  of  a  century  from  this  time. 
Long  before  that  it  is  plain,  and  I  think  (piite  certainly 
within  twenty-five  years,  the  conditions  of  the  expansion 
of  population  must  be  substantially  different  from  what  they 
are  now. 

It  will  be  urged  that  it  is  notorious  the  United  States  can 
support  enormous  masses  of  population.     Its  available  agri- 
cultural area  in  round  figures  is  twelve  or  thirteen  times 
that  of  the  United  Kingdom,  and  eight  times  that  of  France. 
Considering  what  the  population  of  the  United  Kingdom  or 
that  of  France  is,  and  the  superior  fertility  of  many  tracts  of 
the  United  States,  it  appears  safe  enough  to  assume  that  the 
United  States  can  support  an  indefinite  increase  of  popula- 
tion, and  that  there  is  room  for  great  expansion  of  population 
within  the  settled  area.     But  assuming  all  this  to  be  the 
case,  what  w^e  may  observe  is  that  it  is  not  quite  to  the 
present  point.     This  is  not  a  question  of  supporting  a  large 
population  anyhow ;  lioiv  they  are  to  be  supported  is  here  all 
important.     The  moment  there  is  little  new  land  to  occupy, 
the  conditions  of  expansion  must  change ;  every  year  must 
bring  nearer  the  date  when   the  fruits  of  the  soil  will  be 
extracted  with  increasing  difficulty.     The  agriculture  must 
become   different   from   what   it   is   now.     "What  has   been 
already   said,    moreover,   as    to    the    United   Kingdom   and 
France  not  supporting  all  their  own  population,  and  as  to 
what  the  position  in  the  United  States  would  be,  even  as 
compared  with    the    United    Kingdom   and   France,  if  the 
geometric  increase  in  the  United  States  should  continue  no 
more  than  a  century,  may  show  that  there  is,  after  all,  no 


THE    UTILITY    OF   COMMON    STATISTICS.  313 

room  for  an   induliiiite  expansion  of  population  within  the 
settled  area  iu  the  United  States.    I  should  like  to  go  further, 
and  suggest  that  the  limits  of  such  expansion,  M-ithout  a  very- 
great   and   almost   inconceivable  change  in  the  agriculture 
itself,  must  be  very  narrow.     Comparisons  with  European 
States   on  this,  head  seem  very  apt   to   mislead.     But   the 
figure  of  35  i^er  square  mile  as  the  rural  population  of  the 
older  parts  of  the  United  States  is,  after  all,  one-fourth  of 
the  agricultural  population  of  France  per  square  mile ;  and 
there  are  two  important  differences  between  the  agriculture 
of  France  and  the  United  States: — 1.  The  consuming  power 
of  the  United  States  population  is  much  greater,  perhaps 
double  that  of  the  French  population,  so  that  the  soil  cannot 
be  expected  to  support  the  same  number  of  Americans  as 
French.     2.  The  western  farmer  in  the  United  States  grows 
for   export,  not   merely  to  the  towns   of  the  country,  but 
abroad.     A  rural  population  one-fourth  that  of  France  may 
thus  be  quite  sufficient  to  settle  up  the  country.     "VVe  must 
not  come  to  the  subject  with  European  ideas  as  to  the  scale 
of  living. 

It  would  be  foreign  to  my  purpose  to  indulge  in  specula- 
tion as  to  what  will  be  the  consequences  of  this  approach  to 
a  complete  settlement  of  the  United  States,  coupled  with  the 
fact  that  population,  whether  in  the  United  Kingdom,  or  in 
Germany,  or  in  the  United  States,  shows  no  sign  of  abate- 
ment iu  the  rate  of  increase.  It  is  sufficient  for  my  purpose 
to  point  out  tliat  as  the  existence  of  vast  tracts  of  virgin  soil 
in  the  United  States  has  permitted,  during  the  last  hundred 
years,  an  expansion  of  the  European  population  without  a 
precedent  in  history,  has  made  the  economic  history  of 
Europe  in  that  period  entirely  ditl'erent  from  what  it  would 
otherwise  have  been,  so  now  the  approach  to  a  complete 
settlement  must  profoundly  affect  the  world.   The  conditions 


314  THE    UTILITY    OF    COMMON    STATISTICS. 

of  economic  growth  will  be  fundamentally  altered.  Possibly 
there  may  be  chemical  or  other  inventions  rendering  possible 
great  improvements  in  agriculture,  which  will  have  practically 
the  same  effect  as  an  increase  of  the  quantity  of  new  land 
available.  Possibly  we  may  have  the  rate  of  growth  of 
population  itself  checked.  But  with  the  change  of  one 
condition  others  must  change,  if  the  masses  of  European 
people  are  to  remain  at  their  present  level  of  prosperity.  If 
there  is  no  change,  the  nature  of  the  diificulties  that  will 
arise  is  obvious  :  the  masses  of  labourers  will  have  to  contend 
under  increasing  difficulties*  against  a  fall  in  the  scale  of 
living. 

But  while  I  refrain  from  indulging  in  general  speculation, 
I  may,  perhaps,  be  allowed  to  point  out  some  of  the  more 
immediate  consequences  which  are  likely  to  follow  from  an 
approach  to  complete  settlement  in  the  United  States,  of 
which  we  seem  to  be  within  a  measurable  distance.  First  of 
all  there  will  probably  be  a  diversion  of  a  larger  part  of  the 
stream  of  emigration  from  Europe  and  the  Eastern  States  of 
the  American  Union  to  the  north-west  provinces  of  Canada. 
Here  there  are  probably  about  400,000  si^uare  miles  of 
territory  available  for  settlement,  equal  in  (|uality  to  the 
best  land  in  the  United  States  West.  As  there  is  no  such 
field  in  the  United  States  itself,  the  stream  must  apparently 
be  to  the  new  land.  The  second  immediate  consequence  I 
should  look  for  would  be  an  increase  of  manufactures  and  of 
town  population  in  the  United  States.f  The  agricultural 
outlet  becoming  less  tempting,  and  agricultural  wages  tending 
to   fall,   the  population  will  inevitably  be  more  and  more 

*  See  'Some  Leading  Principles  of  Political  Economy  Newly 
Expounded.'  By  J.  E.  Cairnes,  M.A.  Macmillan  &  Co.,  1874, 
pp.  332-4. 

t  See  jjostea,  p.  340. 


THE    UTILITY    OF    COMMON    STATISTICS.  315 

largely  drawn  into  manufacturing.  And  a  third  consequence 
will  probably  be  a  check  to  the  tide  of  emigration  from  older 
countries,  a  greater  demand  upon  the  agriculture  of  those 
countries,  or  at  least  a  mitigation  of  the  extreme  competition 
it  now  sustains  from  virgin  soils,  and  possibly  a  reversal  of 
the  present  tendency  for  rents  to  fall.  Such  changes  may 
hardly  be  ajiparent  for  a  few  years,  with  the  exception, 
perhaps,  of  the  di\'ersion  of  the  stream  of  emigration  to  the 
north-west  of  Canada,  w'hich  has  begun ;  but  it  seems  hardly 
possible  to  doubt  that  they  must  begin  to  be  felt  before  very 
long — perhaps  in  the  course  of  ten,  and  almost  certainly  in 
the  course  of  twenty  years. 

To  sum  up  this  long  review.  These  easy  figures  of  po]iu- 
lation  evidently  go  to  the  heart  of  much  of  our  politics  and 
political  economy.  To  quote  only  the  illustrations  I  have 
given,  we  may  say,  first,  they  give  some  idea  of  the  mass  of 
the  European  populations  in  the  world,  and  consequently  of 
the  overwhelming  strength  of  Eurojican  civilisation.  Xext, 
as  we  have  seen,  they  help  to  explain  the  existence  of  five 
leading  powers  in  Europe,  and  the  changes  in  the  balance  of 
power  which  have  occurred  in  the  last  fifty  or  sixty  years. 
They  equally  help  to  explain  domestic  changes  in  each 
country,  such  as  the  diminished  intensity  of  the  Irish 
difficulty  in  the  United  Kingdom,  or  the  growth  of  social 
diiliculties  in  a  country  like  Russia  through  the  population 
increasing  with  no  other  opening  but  a  restricted  agriculture, 
or  such  external  diiliculties  as  we  have  brought  on  ourselves 
by  the  conquest  of  India  and  the  IJomau  i)eace  we  liave 
established.  Finally,  they  set  before  us  in  a  clear  light  the 
great  economic  phenomenon  of  our  time,  the  creation  of  the 
United  States  of  America,  and  the  provision  by  tliis  and 
similar  agencies  for  a  growth  of  population,  not  only  in  the 


316  THE    UTILITY    OF    COMMON    STATISTICS. 

United  States,  but  in  Europe,  which  is  entirely  without 
precedent.  I  liave  endeavoured  to  supplement  the  last 
figures  with  a  few  others  designed  to  throw  light  on  the 
question  of  the  continuance  of  this  portentous  growth, 
and  the  probability  of  a  check  to  it;  but  the  figures  here 
used  are  also  easily  accessible.  I  trust  you  will  agree  with 
me  that  we  may  conclude  from  all  this  review,  that  the  easy 
figures  of  statistics  which  we  are  all  more  or  less  familiar 
with  are  fruitful.  How  impossible  it  would  be  even  to 
conceive  some  of  the  problems  which  are  now  raised  for 
discussion  if  there  were  no  statistics,  and  how  inexplicable 
many  of  the  facts  of  the  present  day  and  of  history  would 
become  if  statistics  did  not  explain  them. 

If  time  permitted,  it  would  not  be  difficult  to  show  how 
other  familiar  figures  in  statistics  also  supply  problems  for 
discussion,  and  colour  all  our  political  thought.  Let  me 
only  add,  however,  that  the  fact  of  these  easy  figures  being 
so  useful  should  encourage  the  development  of  the  study  of 
statistics.  Familiar  as  are  some  of  the  things  we  have 
been  discussing,  it  is  often  too  evident  that  they  are  not 
sufficiently  appreciated — that  hazy  ideas  are  widely  held 
which  a  clear  knowledge  of  statistics  would  disperse.  Still 
more,  not  only  should  the  accessible  and  easy  figures  be 
more  studied,  but  it  is  most  desirable  to  digest  other  masses 
of  figures  and  increase  the  field  of  what  can  be  readily 
understood.  The  difficulties  in  the  way  in  some  branches, 
as  in  the  case  of  many  trade  figures,  the  figures  of  national 
income,  and  the  like,  are  enormous,  in  consequence  of  the 
varying  aspects  of  the  data  and  the  difficulty  of  impressing 
on  the  public  mind  some  of  the  most  elementary  conceptions 
of  the  statistician,  such  as  the  propriety  of  using  figures  of 
trade  on  an  imperfect  basis  to  show  progress  or  the  reverse 
for  a  series  of  years,  Ijecause  the  basis,  though  imperfect,  is 


THE    UTILITY    OF    COMMON    STATISTICS.  317 

tlii'ouj^liout  the  saiiK'.  Tliere  is  no  doubt,  however,  that  witli 
time  ami  attention,  order  can  be  etlueed  of  what  is  now 
chaotic  to  the  public  mind,  and  many  facts  of  some  com- 
plexity brought  to  tlie  general  knowledge.  We  have  likewise 
to  remember  that  time  is  working  with  us.  The  influence  of 
sim])le  population  statistics  upon  jxilitical  thought,  and  in 
suggesting  ideas  which  colour  literature  and  philosophy, 
which  has  been  our  theme  to-night,  is  the  result  of  a 
systematic  collection  of  statistics,  which  commenced  only 
eighty  years  ago,  and  whicli  is  still  extremely  deficient. 
"We  may  reasonably  hope  for  more  light  from  statistics  as 
time  passes  by,  and  as  it  becomes  possible  to  draw  out 
comparisons  over  longer  periods.  The  statisticians  of  the 
present  day  labour  for  the  future,  and  we  need  not  be 
discouraged  if  in  many  departments  we  have  yet  to  wait  for 
results.     [1882.] 


us    ) 


IX. 

SOME  GEKEEAL  USES  OF  STATISTICAL 
KNOAVLEDGE.* 

Ix  my  inaugural  address  as  President  of  the  Society  in  1882, 
my  topic  was  the  influence  of  statistics  on  general  political 
ideas  and  in  providing  problems  for  the  deliberation  of  states- 
men and  politicians — in  other  words,  the  utility  of  the  most 
common  figures  of  statistics.  In  addition  to  all  their  other 
uses,  and  their  use  in  detail  in  testing  the  effect  of  particular 
pieces  of  legislation  or  solving  special  problems  as  to  the  rate 
of  mortality  and  the  like,  the  most  common  _  figures  of 
statistics,  it  was  pointed  out,  had  their  uses  in  illustrating 
and  clearing  up  familiar  problems  in  politics,  in  making,  as  it 
were,  the.  very  atmosphere  of  politics,  from  which  nations 
could  not  escape,  and  which  got  about  in  general  discussion 
and  literature,  although  many  politicians  themselves  might 
be  ignorant  of  statistics  and  the  right  mode  of  handling 
them.  My  illustrations  were  also  derived  almost  exclusively 
from  population  statistics.  The  vigorous  growth  of  European 
and  ci\ilised  races,  giving  them  the  command  over  the  whole 
world  in  a  way  that  no  similar  civilisation  had  command 
before ;  the  displacement  of  political  power  in  Europe  in  the 
present  century  through  the  growth  of  Germany,  Russia,  and 

*  Eead  at  the  Jubilee  Meethig  of  the  Statistical  Society,  June  23, 
1885. 


SOME    GENERAL    USES    OF    STATISTICAL   KNOWLEDGE.        319 

tlie  United  Kingdom,  while  France  and  Austria  remained 
comparatively  stationary ;  the  enormous  relative  diminution 
of  the  hostile  Irish  element  in  the  United  Kingdom,  mainly 
tlirougli  the  growth  of  population  in  Great  Britain,  and  only 
partly  through  the  diminution  of  population  in  Ireland;  the 
economic  problem  raised  in  India  by  the  rapid  growth  (jf 
population  under  the  lloman  peace  we  have  established  ;  and 
finally  the  rapid  growth  of  population  in  America  and  English 
speaking  colonies,  coupled  with  the  fact  of  the  increased 
dependency  of  European  nations  upon  foreign  supplies  of 
food,  so  that  we  are  coming  within  measurable  distance  of  the 
time  when  there  will  be  no  new  lands  wholly  unoccupied 
over  which  European  populations  may  spread, — were  all 
referred  to  as  making  part  of  the  political  atmosphere  of  the 
time,  as  generating  ideas  which  were  thus  derived  from  the 
most  common  figures  of  statistics,  and  which  could  hardly 
have  been  formed  without  those  continuous  official  records 
which  the  principal  nations  liave  now  possessed  for  nearly 
a  century.  In  the  present  paper  I  propose  to  illustrate 
further  the  theme  of  the  above  address.  The  most  common 
figures  of  statistics  supply  many  more  ideas  to  the  political 
thought  of  the  time,  and  in  few  ways,  as  I  believe,  are 
statistics  more  serviceable  to  society  than  in  supplying  such 
topics  for  discussion. 

I  propose  on  the  present  occasion  to  begin  by  referring  at 
more  length  than  I  did  in  my  former  address  to  the  remark- 
able growth  of  European  populations  in  recent  times,  in  both 
the  respects  dwelt  on  before,  viz.,  the  vigour  of  Western 
European  civilisation  implied  in  this  growth,  and  the  dis- 
placement of  political  power  which  has  accompanied  it. 

For  this  purpose  I  propose  to  use  as  a  starting  point  a  table 
which   I   find   in   M.   Moreau    de   Jounes's   '  Elements   de 


320        SOME   GENERAL   USES   OF   STATISTICAL   KNOWLEDGE. 

Statistique/'  giving  the  population  of  Europe,  according  to 
the  most  trustworthy  authorities,  just  before  the  outbreak  of 
the  French  Eevolution — that  is,  about  one  hundred  years  ago. 
With  this  table  I  have  compared  the  population  of  Europe  as 
recorded  at  the  last  census  of  the  different  countries  con- 
cerned, so  that  in  fact  we  have  a  hundred  year's  progress  in 
population  before  us.  The  table  of  M.  Moreau  de  Jonnes  is 
very  carefully  compiled,  and  although  there  were  hardly 
such  things  as  good  censuses  until  the  present  century,  the 
investigations  which  have  since  been  made,  and  the  scattered 
notices  as  to  the  population  of  principal  countries  in  previous 
periods,  all  tend  to  show  that,  for  the  purposes  of  a  comparison 
such  as  I  now  make,  the  table  may  be  accepted.  Even 
if  it  is  a  few  millions  out,  that  would  hardly  matter  as  regards 
a  comparison  extending  over  so  long  an  interval.  The  result 
of  this  comparison  is  seen  in  detail  in  the  accompanying  table. 
(See  next  page.)  It  has  to  be  considered  in  reading  it 
that  changes  have  been  made  by  the  alteration  of  national 
boundaries  and  the  like,  but  the  broad  results  are  not 
affected  by  such  considerations : 


SOME   GENERAL    USES    OF   STATISTICAL    KNOWLEDGE.        321 

Population  of  Europe  in  1788  and  at  the  Present  Time 
Compared. 

[.Vo^c— The  figures  for  1788  arc  from  M.  Morcau  de  Joinics"  Elements 
de  Statistiiiue,'  j).  429,  et  scq.] 

[In  thousands.] 


1788. 


Sweden  and  Finland  . . 

Denmark  and  Norway 

Eussian  Emi^ire  .. 
Poland 


Great  Britain  and  Ireland 

Holland         

France   

Germany       , 

Prussia 

Austria  and  Low  Coun 

tries   

Switzerland 

Spain     

Portugal        

Italy      


Turkey  and  Greece 


2,56o| 

1,490 

24,000  [ 
2,800 

i2,<:foo 
1,800 

24,800 
g,oooj 
6,400  f 

19,611) 

1,800' 
10,500 

2,800 
16,000 


9,000 


Present  Time. 


144,561 


Sweden 

Finland 

Denmark       .'. 

Norway 

Kussian  Empire  and ) 
Poland,  exclusive  on 
Finland J 

Great  Britain  and  Ireland 

Holland 

France  

German  Emi:)ire  .. 

Austria  Hungary 

Belgium        

Switzerland 

Spain 

Portugal        

Italy      

Greece 

Bulgaria        

Servia 

Roumania 

Turkey  in  Europe*     . 


4,565 
2,060 
1,969 
1,925 

96,300 

36,000 

4,013 

37,321 

45,234 

37,806 
5.520 
2,846 

16,634 
4,160 

28,459 
1,679 
1,998 
1,500 
5,500 
6,000 


341,489 


The  most  general  figures  are  very  striking.  The  popula- 
tion of  Europe  at  the  present  time  comes  out  at  341,489,000  ; 
but  allowing  for  the  increase  in  Germany  and  other  countries 
since  the  last  census,  not  included  in  the  table,  and  for 
the  fact  that  a  year  or  two  has  still  to  elapse  before  the 
interval  of  one  hundred  years  is  covered,  we  may  put  the 
population  at  the  present  time,  for  the  purposes  of  comi)ari- 


*  Exclusive  of  Bulgaria  and  Bosnia. 


II. 


322        SOME    GENERAL    USES    OF   STATISTICAL    KNOWLEDGE. 

son,  lit  the  round  figure  of  350  millions.  The  population  in 
1788  in  like  manner,  which  comes  out  at  144,561,000,  may 
be  spoken  of  roundly  as  145,000,000.  The  increase  has 
accordingly  been  as  follows  : — 

Millions. 
European  population  at  present  time       ,.      ..     350 
„  a  hundred  years  ago        145 


Increase 


The  population,  in  other  words,  has  increased  about  one- 
and-a-half  times,  so  that  wdiatever  Europe  was  a  century  ago 
in  relation  to  countries  like  China  and  India,  and  the  mis- 
cellaneous native  populations  of  Africa  and  the  American 
continent,  then,  unless  these  countries  have  changed  in 
population  in  like  manner,  which  there  is  no  reason  to 
believe,  the  preponderance  of  Europe  in  the  world,  if  there 
was  preponderance  before,  must  have  enormously  increased. 
"We  may  take  it  for  granted,  I  think,  that  except  in  India,  no 
such  increase  has  been  possible.  In  China,  Africa,  and  else- 
where, the  condition  of  the  native  populations  is  even  now 
such  that  numbers  must  increase  but  slowly ;  they  are  still 
in  the  condition  from  which  the  European  races  themseh'e> 
emerged  only  at  the  beginning  of  last  century,  and  from 
which  perhaps  they  had  not  fully  emerged  until  about  a 
hundred  years  ago,  when  the  table  begins. 

The  comparison  does  not  stop  here.  To  the  increase  of  the 
population  in  Europe  we  must  add  the  increase  of  Eurojiean 
populations  outside  Europe,  which  has  been  on  an  enormous 
scale  in  the  last  hundred  years.  The  whole  population  of 
the  United  States,  Canada,  the  Australian  Colonies,  the  white 
population  at  the  Cape,  and  part  of  the  populations  of  Brazil 
and  the  South  American  Eepublics,  fall  to  be  included  in  this 
increase  ;  and  if  we  take  the  European  population  a  hundred 


SOME   GENERAL    USES    OF   STATISTICAL   KNOWLEDGE.        323 

years  a_2;o  at  150  millions,  to  allow  for  tlic  nunibors  existing 
at  that  time  in  the  United  States  and  elsewhere,  and  tlien 
compare  it  with  the  present  European  population,  both  in  and 
out  of  Europe,  we  shall  probably  have  a  comparison  not  far 
iVom  the  mark.  These  extra-European  populations  of 
Eur()i>ean  descent  may  be  reckoned  as  follows  at  the  present 
time  : — 

Jlillions. 

United  States,  deducting  negro  population*  ..  55 

Canada 4i 

Australia        3 

Cape  of  Good  Hope      -i- 

Soutli  American  Eepublics  and  Brazil,  say    ..  7 

Total      70 

And  allowing  for  this  extra-European  populati(jii,  we  get 
the  following  comparison  : — 

Jlillions. 

European  population  in  Europe  at  present  time,  1     , 

as  above \  ''^ 

„  out  of  Kuroiie 70 


Total 


420 


European  population  in  and  out  of  Europe  in) 
17a8 }  ^5c 

Increase 270 

The  increase  on  tliis  showing  is  much  more  than  one-and- 
a-half  times ;  and  is  nearly  as  much,  it  Avill  be  observed,  as 
the  populations  of  either  India  or  China,  wliieh  are  by  far  the 
most  important  in  respect  of  numbers  of  the  populations  out- 
side Europe.  If  we  take  European  populations  as  one  mass, 
then  the  present  total  of  400  millions  and  upwards  most 
assuredly  gives  them  the  preponderant  position  in  tlu;  woild. 

*  This  is  allowing  for  a  considerable  increase  since  last  census  down 
to  1888. 

Y  2 


324        SOIIE    GENERAL    USES   OF   STATISTICAL    KNOWLEDGE. 

Allowing  for  the  present  rate  of  growth,  if  it  should  only 
continue   another  century,  these  numbers,  from  being  400 
millions,  will    grow   to    over    1000    millions;    so   that   the 
present   numbers  of  India   and  China  will    be    enormously 
exceeded.     Allowing  indeed  for  the  special  growth  in  the 
United  States,  which  will  have  a  population  of  800  millions  in 
a  century  if  there  is  no  change  in  the  rate  of  growth,  and 
for  a  similar  growth  in  English-speaking  colonies,  the  number 
of  1000  millions  at  the  end  of  a  century  as  the  population  in 
Europe   or  of  European  descent  will   be  greatly  exceeded. 
New  events  may  bring  about  an  enormously  larger  growth  of 
non-European  population,  or  the  European  rate  of  increase 
may  itself  fall  off ;  1  >ut  neither  of  these  changes  will  occur 
without  a  revolution  in  what  has  became  the  existing  order, 
of  which  an  extraordinary  and   exceptional   growth  of  the 
European  races  seems  a  part.     The  preponderance  of  European 
races  is  of  course  further  assured  by  the  sovereignty  they 
have  established  in  every  part  of  the  world  over  other  races. 
But  it  may  be  questioned  whether  the  preponderance  would 
not   have   been   better   ensured  by  the  absolute   refusal  of 
European    races    to    undertake    such    sovereignty.      It    is 
European  rule  wdiich  makes  possible  in  some  parts  of  the 
world  a  growth  of  other  races  at  a  rate  resembling  that  of 
European  races  themselves,  and  whicli  in  the  end,  as  in  India, 
may  raise  up  very  difficult  problems  for  the  ruling  race. 

Of  course  questions  may  also  be  raised  as  to  the  quality  of 
the  European  increase  itself.  The  European  races,  as  we  know, 
are  not  all  of  the  same  type.  Among  the  peoples  which  have 
increased  most  we  have  English,  German,  Eussian,  and  some 
of  the  southern  nations.  The  preponderance  of  Europe  in  the 
world  will  depend  very  much  on  which  race  is  preponderant, 
and  the  results  in  the  future  may  be  very  different,  according 
as  the  preponderance  among  the  increasing  race  itself  falls  to 


SOME    GENERAL    USES    OF   STATISTICAL   KNOWLEDGE. 


325 


the  English  and  German,  or  to  the  liussian  portions  of  the 
race.  In  the  Latter  case  clearly  the  increase  is  that  of  a 
population  which  assimilates  the  non-European  races  more 
quickly  than  English  or  German,  hut  whicli  is  at  tlie  same 
time  less  distinctly  "  civilised  "  in  the  sense  we  understand 
in  Western  Europe.  The  relative  growth  of  these  different 
peoples  in  the  last  hundred  years  may  be  described  as 
follows : — 


Increase  of  English,  German,  liitssiaji,  and  South  European 
Peoples  compared. 

[In  millinus.] 


1788. 

Present  time. 

Increase. 

1.  Englisli,  viz. :  Sweden;  Denmark  and j 
Norway  ;   Great  Britain  and  Ireland ;  > 

Holland;  in  Europe        J 

Ditto,  out  of  Europe 

17* 
4h 

50i 

m 

Total     

2.  German,  viz. :  Germany  and  Austria,] 
deducting  Belgium  and  including  Aus-[ 
tria-Hungary  at  present  time      . .      . .  J 

3.  liussian,  including  Finland 

•i.  Races  of  South  European  Countries,] 

including  France,  Belgium,  and  Swit-[ 
zerland,  in  and  out  of  Euroiic        ..       ..  ) 

22 

35 
65  i 

113 

83 

98  i 

125i 

91 

48 
71 
60 

Grand  Total      

150     [      420 

270 

According  to  tliis  table  the  increase  of  the  English  people, 
while  the  greatest  in  amount,  is  the  most  remarkable  in  every 
way,  the  numbers  being  now  fivefold  what  they  were  a 
century  ago ;  while  the  Eussian  numbers,  which  come  next,  are 
less  than  four  times  what  they  were,  the  (Jermau  are  only 
two-and-a-lialf  times  what  they  were,  and  the  other  races  of 
Europe  are  only  twice  wliat  they  were.  It  has  to  be  con- 
sidered, however,  tliat  part  of  the  so-called  Englisli  increase 


326        SOME    GENEKAL   USES    OF   STATISTICAL    KNOWLEDGE. 

is  really  in  point  of  blood,  a  German  increase;  the  German 
increase  beyond  the  seas  l)eing  credited  to  the  Englisli  race, 
because  the  two  races  are  blended  and  the  latter  is  pre- 
dominant in  the  blend.  A  certain  part  of  the  Paissian 
increase  is  also  due  to  the  conquest  of  non-European  races, 
though  not  so  much  as  is  sometimes  supposed ;  the  main 
increase  of  Eussian  population  in  the  last  hundred  }-ears 
having  undoubtedly  been  an  increase  of  pure  Eussian  breed, 
which  has  found  room  to  grow  by  a  process  of  internal 
emigration  and  colonisation.  It  remains  to  be  seen  what  the 
relative  progress  will  be  in  future.  The  probabilities  would 
seem  to  be  that  as  the .  increase  of  the  English  race  with  the 
German  blend  has,  apart  from  conquest,  been  so  exceptionally 
rapid,  and  as  the  circumstance  of  its  owning  a  vast  un- 
occupied area  exceptionally  favours  the  growth  of  that  race, 
which  is  exce]3tionally  favoured,  moreover,  by  the  possession 
of  vast  capital  and  enterprise  permitting  a  special  increase  of 
non-agricultural  population,  then  the  English  race  in  and  out 
of  Europe  in  another  hundred  years  will  increase  more 
rapidly  than  any  other  parts  of  the  European  race.  In 
another  century,  at  the  past  rate  of  progress,  looking  at  that 
progress  in  detail  as  above  explained,  there  will  be  nearly 
1000  millions  of  this  race  alone  in  the  world;  while  the 
Eussian  race,  apart  from  conquest,  will  not  exceed  300 
millions,  and  the  others  increasing  more  slowly  still  will  lag 
far  behind.  Here  again  the  conditions  may  be  altered. 
Germany,  for  instance,  by  acquiring  a  territory  of  its  own 
suitaljle  for  colonisation,  may  increase  at  a  greater  rate  than 
in  the  past,  while  the  diversion  of  German  emigration  from 
English  coloniBs  and  the  United  States  may  diminish  the  rate 
of  increase  of  those  regions.  But  there  is  hardly  time  now  for 
such  a  diversion  to  make  a  great  difference  in  the  eventual 
result.     A  material  diversion  of  German  emigration  is  hardly 


SOME   GENERAL    USES   OF   STATISTICAIi   KNOWLEDGE.        1527 

jtossiblc  very  soon,  ou  accouut  of  the  greater  attractiveness  of 
existing  settlements  as  compared  with  settlements  that  are 
wholly  new,  as  we  see  with  regard  to  the  United  States, 
which  continues  to  be  the  main  field  for  emigration,  just 
because  there  is  more  partly  settled  country  tliere  than  in  any 
<jther  quarter. 

1  shall  have  additional  remarks  to  make  on  the  relative 
progress  of  the  different  sections  of  the  European  race  in 
connection  with  the  fpiestion  as  to  whether  or  not  tlierc,  has 
been  an  average  increase  of  wealth  per  head  among  tliose 
populations  that  have  increased  so  rapidly,  which  I  propose 
afterwards  to  discuss.  Meanwhile  I  pass  on  to  notice  one  or 
two  obvious  facts  as  to  the  displacement  of  political  power 
implied  by  the  figures.  The  prominent  facts  clearly  are  that 
of  the  great  European  powers,  England,  Germany,  and  Iiussia 
liave  grown  enormously,  changing  with  reference  to  each 
other  and  with  reference  to  the  rest  of  Europe,  wliik'  the 
Austrian  Empire  and  Erance  have  grown  ])ut  little  in  com- 
parison.*    The  facts  on  this  head  are  : — 

*  This  subject  is  treated  of  above  (sec  p.  286),  on  the  basis  of  a  com- 
parison between  1815  and  1880.  The  figures  used  above  are  con- 
sequently different  in  detail  from  those  used  here,  although  the 
changes  shown  are  all  in  the  same  direction.  A  difference  is  also 
made  by  the  figures  as  to  the  population  of  Eussia  used  here,  includ- 
ing the  population  out  of  Europe  (see  Tal)lo  on  p.  328),  as  well  as  tho 
population  in  Europe,  which  only  is  dwelt  with  in  the  former  Table 
(p.  286). 


328 


SOME   GENERAL    USES    OF   STATISTICAL   KNOWLEDGE. 


ComiMrativc  Groivtli  in  Population  of  the  Five  Great  European 
Powers,  and  of  the  rest  of  Europe,  in  a  Hundred  Years — 
1788-1885. 

[The  figures  in  the  amount  columns  are  stated  in  millions.] 


Populal 

ion,  1788. 

Population,  1885. 

Increase. 

Amount 

12 

27 
15 
25 
20 

46 

Per  Cent 
of 

Total. 

Amount 

Per  Cent 

of 

Total. 

Amount 

Per  Cent. 

England  (the  Uni-J 
ted  Kingdom)   ..  | 
Eussia,  with  Poland 
Germany 

France  

Austria 

Eest  of  Europe    . . 

8-2 
i8-5 

IO-2 

I7-I 

14-4 

31-6 

36 

98 
45 
37 
38 

88 

IO"4 

28-6 

13-4 
IO-8 
ii-i 

25-7 

24 

71 

30 
12 
18 

42 

200 

260 

200 

50 

90 

IIO 

Total  ..      .. 

145* 

•• 

342* 

197 

136 

*  In  this  Table,  as  it  is  necessary  to  make  comparisons  in  detail,  the 
totals  are  given  as  in  the  Table  on  321,  and  not  the  round  figures  of 
350  millions  as  the  total  pojDulation  of  Europe  at  the  present  time  and 
150  millions  as  the  population  a  hundred  years  ago  which  are  else- 
where used. 


Thus  England,  Eussia,  and  Germany  have  all  gained 
relatively  in  numbers,  while  the  proportions  of  France  and 
Austria  and  of  the  rest  of  Europe  to  the  total  have  declined. 
This  is  not  the  jilace,  nor  would  this  lie  the  occasion,  to 
discuss  a  purely  political  question.  It  is  obvious  also  that 
the  question  of  relative  power  is  not  determined  exclusively 
by  numbers.  All  that  need  be  said  here  is  that  so  far  as 
numbers  are  an  element  in  such  questions,  the  changes  in 
Europe  in  the  last  hundred  years  have  been  immense.  How 
far  the  effect  of  changes  in  numbers  is  modified  by  other 
causes  is  clearly  a  question  which  it  would  be  important  for 
the  politicians  of  all  countries  to  take  note  of. 

The  most  serious  qualification  to  be  made  in  the  table 


SOME   GENERAL    USES   OF   STATISTICAL    KNOWLEDGE.        329 

relates  perhaps  to  liussia.  The  popuhitiou  of  'J8  inillions 
includes  14  inillions  of  people  in  Asia.  By  parity  of  treat- 
ment, the  non-European  population  of  the  I'ritisli  Empire 
ought,  it  would  seem,  to  be  included.  Even  if  this  14 
millions  were  deducted,  however,  the  increase  of  population 
in  European  liussia  would  still  be  from  about  27  to  84 
millions,  or  more  than  200  per  cent.,  a  percentage  increase 
equal  to  that  of  England  or  Germany,  while  the  amount 
would  still  be  larger  than  in  either  of  the  two  other  cases. 

In  connection  with  this  increase  of  population,  I  have  to 
notice  again,  as  I  noticed  before,  that  the  progress  of  Italy  is 
very  marked.  With  a  population  of  28  millions  and  up- 
Avards,  Italy  is  coming  very  nearly  into  the  rank  of  the  great 
powers,  as  far  as  numbers  are  concerned,  and  at  the  present 
rate  of  growth  must  soon  approach  very  closely  the  numbers 
of  France  and  Austria. 

Another  aspect  of  this  change  of  numbers  has  to  ])e  noted. 
Two  at  least  of  the  great  powers — liussia  and  England — have 
more  contact  of  a  political  kind  with  each  other  outside 
Europe  than  they  have  in  Europe.  It  is  as  Asiatic  powers 
they  are  related  most  closely  in  the  rivalry  for  empire. 
England,  generally,  and  to  some  extent  Eussia,  have  also 
very  close  relations  of  neighbourhood  to  other  non-European 
powers.  The  English  Empire  altogether,  as  Mr.  Gladstone 
long  ago  pointed  out,  is  not  so  much  a  European  as  an  inter- 
continental power,  whose  general  relations  throughout  the 
world  have  to  be  studied  by  those  concerned,  and  not  merely 
its  special  European  relations.  France  is  another  of  the 
great  powers  which  lias  also  such  European  relations,  though 
these  are  not  so  great  relatively  to  French  interests  as  those 
of  either  Russia  or  England.  Lately,  too,  Germany  and 
Italy  have  shown  a  disposition  to  change  from    specially 


330        SOME    GENERAL    USES   OF   STATISTICAL   KNOWLEDGE. 

European  into  inter-continental  powers.  It  is  obvious  then 
that  international  politics  have  become  a  very  diflerent  thing 
from  what  they  were  a  century  or  two  ago.  From  being 
questions  between  powers  in  Western  Europe — a  small  corner 
of  the  world, — and  affecting  an  aggregate  population  no 
larger  than  that  of  one  of  the  great  powers  of  Europe  at  the 
present  time,  they  have  becpme  questions  of  world-wide 
range,  affecting  hundreds  of  millions.  The  people  of  Europe 
have  outgrown  their  narrow  limits,  and  are  become  the 
peoples  and  powers  of  the  world.  Last  century,  just  before 
the  French  Eevolution,  the  rivalry  between  France  and 
England  in  America  and  the  East  anticipated  to  some  extent 
what  has  become  the  normal  characteristic  of  the  new  era. 
All  the  nations  of  Europe  are  bigger,  and  the  overflow  brings 
them  into  contact  outside  Europe  itself.  It  would  be  out  of 
]»lace  here  to  discuss  all  the  consequences  of  these  widely 
extended  imperial  relations.  They  are,  however,  most 
directly  connected  with  the  predominance  of  the  European 
races  in  the  world,  which  has  developed  so  greatly  during 
the  last  hundred  years,  and  which  is  still  developing  so  fast. 
Meanwhile,  as  I  remarked  in  my  former  paper,  especially 
with  reference  to  the  growth  of  the  United  States,  the 
])urely  European  politics  are  dwarfed. 

Before  passing  from  this  question  of  the  displacement  of 
])olitical  power  due  to  changes  in  population,  I  may  perhaps 
l>e  allowed  to  note  that  as  yet  politicians  on  some  of  these 
questions  hardly  relish  statistics,  and  are  disposed  to  ignore 
them  altogether.  One  of  those  I  referred  to  in  my  former 
paper,  viz.,  the  diminution  of  the  danger  of  disloyalty  in 
Ireland  by  reason  of  the  changes  in  the  proportion  of  the 
Irish  population  to  that  of  the  United  Kingdom,  has  inci- 
dentally come  up  for  consideration  in  connection  with  the 


SOME   GENEllAL   USES    OF   STATISTICAL   KNOWLEDGE.        331 

IJcdistributiun  of  Seats  Bill,  wWirU  is  still*  peiidiii,L; ;  but 
])oliticians  as  yet  have  refused  to  recognise  the  anomaly  of 
the  Irish  representation  which  creates  so  much  of  the 
])olitical  difficulty.  Ireland  being  at  the  present  time  en- 
titled by  i)opulation  to  rather  less  than  a  seventh  of  the 
representation  of  the  United  Kingdom,  politicians  conlirm  it 
in  the  possession  of  nearly  a  sixth  of  that  representation, 
giving  it  over  100  members  instead  of  about  90  only,  and 
instead  of  the  30  to  which  it  would  be  entitled  if  it  were 
represented  in  proportion  to  its  numbers  in  the  same  way  as 
il  was  represented  at  the  time  of  the  Union  and  long  after. 
It  is  safe  to  predict  that  before  long  these  and  other 
anomalies  in  representation  will  bo  corrected.  The  figures 
in  such  matters  represent  facts,  and  it  is  im])()ssible  to 
sujjpose  that,  however  unwilling  politicians  may  be  to  touch 
proldems  of  this  sort,  the  fact  of  an  artificially  large  repre- 
sentation in  the  Imperial  Parliament  being  given  to  a  portion 
of  the  United  Kingdom  which  ha})pens  to  be  hostile  to  the 
rest  will  long  be  tolerated.  AVhat  politicians  seem  to  forget 
is  that  the  anomaly  becomes  more  iiagrant  every  year  by  the 
force  of  the  growth  of  population.  At  the  census  of  1871 
IvcLind  was  just  about  entitled  to  the  representation  it  then 
had,  on  the  basis  of  mere  numbers,  perhaps  to  rather  more. 
At  the  census  of  1881  it  was  entitled  to  96  members  only 
against  the  former  105.  In  1884  the  proper  proportion  was 
about  92  members  ;  in  the  current  year  it  is  about  90  only ; 
by  the  next  census  it  can  hardly  exceed  80 ;  and  by  the 
census  of  1901  the  proportion  will  be  about  08.  It  is  some- 
times urged  that  there  is  no  knowing  beforehand  how 
population  \vill  cliange.  Population,  it  is  said,  may  lluw 
back  to  Ireland,  and  the  growth  in  the  United  Kingdom 
may  be  arrested.     It  is  tolerably  certain,  however,  to  any 

June,  1885. 


332        SOME   GENERAL   USES    OF   STATISTICAL    KNOWLEDGE. 

one  who  cares  to  follow  the  movements  of  population,  that 
such  changes  in  the  dynamics  of  the  matter  as  would  be 
implied  by  any  sensible  reflux  to  Ireland  or  arrest  of  the 
growth  in  the  United  Kingdom  are  most  improbable, — in  fact, 
so  very  improbable  that  action  ought  to  be  based  on  the 
assumption  that  they  will  not  occur.  They  would  imply  a 
very  sweeping  economic  and  social  revolution  indeed.  It 
would  be  quite  safe,  therefore,  for  Parliament  to  anticipate 
changes  in  population  a  few  years  ahead,  and  so  give  rather 
more  in  proportion  to  districts  where  the  growth  is  fastest. 

In  any  case  disaffection  in  Ireland  being  only  the  dis- 
affection of  a  palpable  fraction  of  the  whole  United  Kingdom, 
can  never  be  the  same  influence  that  it  was  when  Ireland 
contained  half  the  population  of  Great  Britain.  It  is  now 
an  easier  problem  in  every  way  to  deal  with.  There  is  no 
force  in  Ireland  to  demand  separation  capable  of  measuring 
itself,  even  by  the  hap})iest  fortune,  with  that  of  the  United 
Kingdom ;  and  the  sej^aration  of  the  disaffected  part  of 
Ireland,  if  it  could  be  brought  about,  might  become  tolerable, 
like  the  separation  of  the  Isle  of  Man  and  the  Channel 
Islands,  just  because  that  disaffected  part  is  relatively  so 
small.  These  hard  facts  must  govern  the  situation  in  what- 
ever w^ay  politicians,  for  purposes  of  their  OM-n,  or  for  any  or 
no  reason,  adjust  the  representation.  Still  it  is  extremely 
interesting  to  note  how  shy  in  this  instance  politicians  have 
been  of  statistics,  though  they  quote  statistics  often  enough. 
The  want  of  respect  for  facts  must  be  held  to  prove  how 
much  political  education  is  in  arrear.* 

The  next  broad  conclusion  from  the  most  conniion  statistics 
wdiich  affects  the  ideas  of  the  time  is  the  enormous  multi- 


*  The  following  short  table  shows  what  the  proportionate  represen- 
tation of  Ireland  would  be  according  to  tlie  nunil»ers  of  the  census  of 


SOME  gi:xi:kal  uses  of  statistical  knowledge. 


333 


plicaLion  of  resDurces  in  tlie  ciinininnilics  in  ijiu^stion.  These 
coiiiiinnnties,  which  have  hceii  iucreasini,'  so  enormously  in 
popuLation,  have  been  increasin;^'  more  remarkalily  in  wealth. 
It  would  1)(^  impossible  for  me  to  state  figures  on  this  head 
for  the  whole  of  Europe,  but  the  immensity  of  the  change 
can  be  shown  Ijy  a  reference  to  one  or  two  figures  only. 
Thus,  for  the  United  Kingdom,  the  average  capital  per  head  a 
century  ago  could  hardly  be  put  at  more  than  £100,  if  so 
much.  In  1815  the  wealth  of  Great  Britain  per  head  was 
reckoned  at  £170  only,  although  great  progress  had  been 
made  in  the  interval  from  1788,  so  that,  allowing  for  such 
an  increase,  and  for  the  comparative  poverty  of  Ireland,  £100 
per  head  a  century  ago  for  the  whole  of  the  United  Kingdom 
seems  ample.  This  Avould  make  P^nglish  capital,  then,  about 
1200  million  pounds  only  ;  whereas,  according  to  iny  own 
calculation  on  the  basis  of  the  income  tax  figures  of  1875, 
the  capital  then  was  £250  per  head,  or  £8,500,000,000 
altogether,  an  increase  of  seven  times  in  less  than  a  century. 
In  France  there  has  equally  been  a  vast  increase,  the  present 
capital  being  estimated  at  not  far  short  of  that  of  England, 
while  a  century  ago  it  would  hardly  exceed  2000  millions. 
In  the  United  States  comparisons  are  thrown  out  by  a 
change  in  the  basis  of  the  figures  of  the  last  census,  but 


1871  and  1881,  and  the  probable  numbers  of  the  census  of  1891  and 
1901,  on  the  basis  of  a  representation  of  6G0  for  tlie  whole  of  the 
United  Kingdom. 


rojiulatiun, 

in  Millious. 

Kumlicr  of  Moni- 

United  Kingdom. 

Ireland. 

bers  to  Ireland. 

1871      

'81      

'91      

1901      

31-5 
34-9 
39-0 

4,V5 

5-4 

5-1 
4-8 

4-5 

113 
96 
8i 

334        SOME    GENERAL   USES    OF    STATISTICAL   KNOWLEDGE. 

there  lias  certainly  been  an  immense  increase — from  about 
£40  per  head  a  century  ago  to  at  least  £150.  The  capital  ol' 
these  three  nations  alone  may  figure  out  as  something  like 
24,000  million  jiounds  sterling.  There  may  have  been  no 
such  increase  in  other  countries,  though  the  increase  in 
Germany  at  least  must  have  been  rapid ;  but  we  may  be  sure 
that  a  very  great  increase  has  taken  place,  j)erhaps  least  of 
all  in  Eussia  and  the  south-eastern  countries  of  Europe, 
which  have  remained  almost  purely  agricultural,  as  compared 
with  England,  France,  and  Germany.  Hardly  anywhere  can 
there  be  an  unimportant  increase. 

These  figures,  I  may  say,  are  not  wholly  in  the  air.  They 
are  supported  by  records  of  the  acreage  and  production  of 
crops,  the  census  of  the  manufacturing  population  and  of 
factories,  the  records  of  entries  and  clearances  of  shipping, 
the  movements  of  imports  and  exports,  the  growth  of  banks, 
and  similar  statistics.  To  show  only  what  is  meant,  look 
merely  at  such  a  fact  as  the  production  of  iron  in  the  United 
Kingdom.  A  century  ago  the  output  was  estimated  at 
08,000  tons.*  Last  year  it  was  about  8  million  tons.  The 
production  of  the  world,  which  was  probably  a  century  ago 
as  insignificant  as  in  England,  is  now  over  20  million  tons 
per  annum  ;  that  production  being  mainly  the  production  of 
the  European  nations,  or  nations  of  European  descent  we 
have  been  describing,  and  chiefl}^  of  the  most  prominent- 
England,  the  United  States,  Germany,  and  France.  Similarly, 
as  regards  coal,  the  production  in  England  at  the  beginning 
of  the  century  was  apparently  over-estimated  at  10  million 
tons  or  thereabouts,  and  it  is  now  over  160  million  tons. 
The  entries  and  clearances  of  shipping  again  have  increased 
since  the  beginning  of  the  century  in  the  United  Kingdom 

*  Porter's  '  Progress  of  the  Nation,'  p.  270. 


SOME   GENERAL    USES    OE    STATISTICAL   KNOWLEDGE.        335 

alioui  tifLceii  times.  TluTe  is  no  doiibt,  tlicrefore,  jiIhuiI  the 
increase  of  wealth,  the  facts,  indeed,  lying  on  the  very  surface 
of  the  economic  liistory  of  the  last  hundred  years.  There  are 
liardly  data  to  put  this  increase  into  figures,  very  easily  ; 
thdUgU  perhaps  some  ax^proximation  coukl  ])e  arrived  at  witli 
care;  Avhile  the  increase  of  nominal  values,  it  must  be 
rememhored,  would  not  show  the  real  increase  of  the 
(|uantities  of  things  which  has  occurred,  and  that  is  the 
material  point. 

Similarly,  as  regards  income ;  tlie  income  of  the  people  of 
the  United  Kingdom  a  century  ago  could  liardly  be  put  at 
more  than  200  million  pounds,  against  more  than  1200 
million  pounds  at  the  present  thne,  a  rise  from  £16  to  £35 
per  head,  while  there  have  been  similar  changes  in  Germany 
and  France,  if  there  have  not  been  equally  great  changes  in 
Itussia  and  other  countries.  Here  again  it  has  to  be  con- 
sidered that  nominal  values  are  not  everything.  The  range 
of  prices  is  even  lower  than  it  was  a  century  ago,  so  that  tlie 
average  real  income  per  liead  must  have  more  than  doubled, 
if  we  assume  that  nominal  values  have  doubled. 

The  fall  of  prices  generally  may  perhaps  be  questioned ; 
but  the  pohit  is  not  really  difficult.  The  facts  arc  exactly 
known  as  regards  wheat  and  such  articles,  while  it  is  equally - 
well  known  as  regards  all  articles  of  manufacturing  industry 
— the  manufactures  from  iron  and  coal,  and  the  textile 
manufactures  especially — that  the  cost  of  production  has 
encjrmously  diminished. 

The  more  interesting  question  remains,  whether  anything 
can  be  affirmed  to  characterise  the  increase  of  population  as 
regards  the  wealth  of  individuals  and  classes.  1  need  not 
say  to  this  audience  that  averages  do  not  settle  everythin';. 
Theoretically  it  is  of  course  possible  that  all  tliis  increase  of 


336        SOME    GENERAL    USES    OP    STATISTICAL    KNOWLEDGE. 

wealth  in  the  past  century  may  have  arisen  from  a  few  rich 
becoming  richer,  the  rest  of  the  community  remaining  as  poor 
as  they  were,  so  that  all  the  vast  increase  of  population 
recorded  would  rather  be  of  evil  than  of  good  omen,  being 
the  increase  of  a  proletariat  which  starves  in  sight  of  the  ever 
flowing  increase  of  wealth.  Nor  am  I  sure  but  that  this 
theoretical  picture  is  imagined  to  be  the  picture  of  the  reality 
by  Socialists  and  some  politicians  who  would  disavow  the 
title.  But  has  this  been  the  real  character  of  the  increase  ? 
The  answer  can  only  be  given  by  statisticians,  and  without 
going  into  it  fully  at  present,  as  it  would  make  more  than  a 
paper  by  itself,  I  propose  to  summarise  the  main  heads  of  the 
evidence,  which  have  led  every  statistician  I  know  of  to  the 
conclusion  that  this  vast  increase  of  wealth  has  benefited 
all  classes,  and  that  the  increase  of  population  in  the  last 
hundred  years,  in  the  leading  countries  at  least,  is  an 
increase  of  a  population  which  is  better  off  in  all  classes 
from  the  highest  to  the  low^est  than  the  smaller  population 
one  hundred  years  ago.  Every  class,  except  the  lowest,  is 
more  numerous,  and  the  classes  corresponding  to  those  of 
former  times  are  all  richer. 

By  the  necessity  of  the  case,  in  a  paper  like  the  present,  I 
can  only  deal  with  the  broadest  e\ddence.  The  broadest 
evidence  is,  however,  the  best — at  any  rate  on  an  occasion 
like  the  present ;  the  special  object  being  to  show  the  uses 
of  the  most  common  figures  of  statistics,  it  is  desirable  to 
restrict  ourselves  to  figures  that  are  easily  accessible,  or 
which  can  be  easily  demonstrated,  or  which  are  even 
comparatively  well  known,  though  their  bearing  is  not 
popularly  appreciated. 

The  first  kind  of  evidence  is  to  be  found  in  the  different 
studies  which  have  been  made  as  to  the  earnings  and  wages 
of  the  masses.     I  may  refer  to  my  own  inaugural  address  in 


SOME   GENERAL   USES    OF   STATISTICAL   KNOWLEDGE.        337 

1883  on  the  Progress  of  the  Working  Classes  ;  *  to  the  papers 
pill  ilished  by  the  Manchester  Chamber  of  Commerce,  and  the 
President  of  the  Manchester  Statistical  Society  ;  to  the  French 
official  statistics  of  wages;  to  a  book  like  that  of  M.  Yves 
Giiyot,  containing  numerous  records  of  wages  in  England, 
France,  and  the  Continent,  and  in  tlie  United  States ;  and  to 
Mr.  Jeans's  paper  read  before  the  Society  in   1884.      The 
evidence  of  all  these  papers  is  that  of  a  general  rise  of  money 
wages  since  the  early  j^art  of  the  century,  in  few  cases  of  less 
than  50  per  cent.,  and  in   many  of  100  per   cent.     When 
properly  studied,  the  evidence  seems  to   me  to  point  to  a 
general  rise  of  about  100  per  cent. ;  the  averages  of  one  or 
two  of  the  gentlemen,  where  a  lower  average  seems  to  be 
brought  about,  not  being  properly  deduced,  because  an  equal 
weight  is  assigned  to  units  which  are  obviously  unequal.     On 
this  last  point  I  may  say  I  hope  to  produce  some  observa- 
tions before  long,  as  they  form  part  of  an  unfinished  paper 
which  I  was  preparing  for  the  Society  last  January,  and  am 
still  proceeding  with. t    But  whether  the  average  rise  is  50  or 
100  per  cent.,  the  broad  fact  of  a  great  and  general  rise  has 
been  arrived  at  by  every  statistical  inquiry  that  I  know  of, 
and  is  indeed  beyond  dispute.     The  only  question  as  to  the 
condition  of  the  masses  of  the  community  having  improved 
thus  comes  to  be  one  of  general  prices  ;  but   on  this   head 
again  the  evidence  is  only  too  clear.     The  value  of  gold  all 
round  is  as  high  or  higher  than  it  was  fifty  years  ago,  while 
silver  is  not  much  behind,  the  fall  in  silver  as  compared  with 
gold  being  still  less  than  20  per  cent. ;  while  if  we  go  further 
back  than  fifty  years,  to  the   end  of  last   century  or   the 
beginning  of  the  present,  prices   are  found   to   have  been 


*  See  tlio  next  cs-xay  in  tlii.s  volume,  p.  3G5. 
t  See  "  Further  Notes,"  p.  lO'J. 

U.  Z 


338        SOME    GENERAL    USES   OF   STATISTICAL    KNOWLEDGE. 

generally  liiglier  then  than  they  were  even  fifty  years  ago. 
The  direct  investigations  also  bring  out  such  facts  as  the 
diminished  rate  of  general  mortality  and  the  increased  con- 
sumption of  the  main  articles  of  necessity  and  luxury  which 
tlie  masses  consume,  on  all  which  I  need  not  dwell,  as  they 
were  the  topics  of  my  address  the  year  before  last.  All  I  am 
concerned  at  present  to  show^  is  that  this  direct  evidence  is 
practically  unchallenged.  There  are  questions  as  to  the 
degree  of  improvement  raised  by  some  writers  who  are  not 
accustomed  to  handle  statistics,  and  who  compare,  for 
instance,  the  prices  of  some  one  year  in  a  particular  locality 
fifty  years  ago  with  the  prices  of  some  one  year  of  the  recent 
period,  without  attending  to  the  general  run  of  prices  ;  but 
tlie  broad  fact  of  a  great  improvement  is  agreed  to  hj  every 
investigator.  Such  testimony  is  itself  important  in  a  question 
of  evidence.  The  expert  opinion  being  all  one  way,  ought  to 
carry  some  conviction  to  the  popular  mind,  as  it  w^ould  in 
any  other  question. 

Tlie  next  broad  fact  I  would  refer  to  is  the  rapid  increase 
of  population  itself  in  the  last  hundred  years.  Whatever 
may  be  thought  of  the  doctrines  of  Malthus  as  to  the 
increase  of  population  being  conditioned  by  the  increase  of 
the  means  of  subsistence,  few  will  dispute  them  in  the  form 
of  an  assertion  that  an  increase  of  the  means  of  subsistence 
is  usually  the  accompaniment  of  an  increase  of  population. 
There  have  been  cases  of  an  increase  of  population  witli 
barely  an  increase  of  the  means  of  subsistence,  as  in  Ireland 
before  the  potato  famine,  though  it  may  be  questioned 
whether  even  here  there  was  not  in  ordinary  years  an  increase 
of  the  means  of  subsistence  per  head,  Ireland  being  made 
artificially  ja-osperous  by  the  Corn  Laws,  which  gave  the 
agricultural  industry  of  Ireland,  like  that  of  England  itself, 
artificial  protection.     But  apart  from  special  exceptions,  we 


SOME   GENERAL  USES   OF  STATISTICAL   KNOWLEDGE.        339 

are  justified  in  saying  that  a  vast  and  rapid  increase  of  popu- 
lation implies  an  increase  of  the  means  of  subsistence  among 
tlie  masses  who  increase. 

Next  it  is  j)lain  that  a  very  large  part  of  the  increase  of- 
])opulation  has  been  the  increase  of  a  population  better  off 
than  before,  because  this  increase  has  been  largely  in  the 
United  States  and  in  English  colonies,  which  have  attracted 
the  rudest  and  poorest  labour  from  the  old  countries  of 
Europe.  Out  of  a  total  increase  of  250  millions  in  the  popu- 
lation of  European  descent  in  the  last  century,  about  one- 
fourth  at  least  has  been  in  the  United  States  or  English 
colonies,  where  the  current  rate  of  wages  for  rude  labour  is 
notoriously  far  in  excess  of  what  it  is  even  now  in  Europe,  and 
can  hardly  be  put  at  less  than  three  or  four  times  what  it 
was  in  Europe  a  hundred  years  ago.  The  rudest  agricultural 
laljourer  in  the  United  States  receives  about  20s.  a  week  in 
money,  besides  board  and  lodging,  which  cannot  be  put  at 
less  than  10s.  a  week  more.  A  hundred  years  ago,  even  in 
England,  the  agricultural  labourer's  wage  was  7^'.  weekly, 
with  wheat  at  46s.  a  quarter;  and  even  fifty  years  ago  lis. 
and  12s.  a  week  were  common*  wages,  with  wheat  as  high  or 
liigher.  Fifty  years  ago,  however,  there  is  no  doubt  that  the. 
English  agricultural  laliourer  was  considered  better  off  llinn 
any  of  his  neighbours  on  the  Continent  or  than  Irish 
labourers,  from  all  of  whom  the  present  American  labourer 
is  descended.  It  is  certain  then  that  the  condition  of  the 
American  labourer  as  compared  with  tliat  of  tlie  European 
labourer  a  hundred  years  ago,  represents  an  enormous 
advance  in  well-being.     The  improvement  of  tlie  wages  in  a 


*  The  ]n-opcr  phrase  would  perhaps  be  "  maximum  average."  Sec 
"  Furtlier  Notes."  Masses  of  agricultural  labourers  lifty  years  ago  got 
smaller  sums  in  money  than  lis,  and  12a.  a  week. 

z  2 


340        SOME    GENERAL    USES    OF   STATISTICAL   KNOWLEDGE. 

century,  measured  by  tliis  standard,  is  fourfold  and  more. 
Those  who  are  left  behind  in  EurojDe  may  not  have  improved 
SO  much,  but  those  who  have  gone,  and  their  descendants, 
have  improved.  The  ebb  and  flow  of  emigration  help  to 
prove,  moreover,  that  perhaps  a  nearer  adjustment  has  been 
made  between  American  and  European  standards  than  is 
sometimes  thought.  If  the  adjustment  were  not  comparatively 
close,  emigration  from  the  old  countries  would  tend  to  be 
steady  and  continuous  in  good  and  bad  years  alike,  instead  of 
being,  as  it  actually  is,  intermittent. 

The  next  broad  fact  I  would  refer  to  is  the  relative  increase 
of  town  population  in  all  the  great  countries.  Substantially 
this  increase  is  beyond  all  question  due  to  the  higher  return 
to  labour  in  towns  compared  with  the  country.  Other  causes 
may  co-operate,  but  when  we  find  a  universal  effect — in 
France,  in  Germany,  in  the  United  States — we  may  be  sure 
there  is  a  common  and  powerful  cause,  which  cannot  but  be 
the  superior  remuneration  of  labour  in  the  towns,  as  labour, 
like  water,  goes  where  it  is  best  paid.  The  facts  as  to  the 
increase  of  population  in  England,  France,  and  the  Continent 
are  tolerably  well-known ;  but  it  is  not  so  well-known, 
perhaps,  how,  even  in  the  United  States,  the  very  paradise  of 
agricultural  labour,  the  superiority  of  the  towns  makes  itself 
felt.  In  his  report  as  Superintendent  of  the  last  Census  of 
the  United  States  {'  Introduction  to  Compendium  of  the 
Tenth  Census,'  p.  xxxi.)  General  Walker  writes  : — 

"  In  1790  one-thirtieth  of  the  population  of  the  United 
States  lived  in  cities  of  8,000  inhabitants  and  over ;  in  1800 
one-twenty-fifth  ;  in  1810  and  also  in  1820  one  twentieth  ;  in 
1830  one-sixteenth;  in  1840  one-twelfth;  in  1850  one- 
ei'dith  ;  in  1860  one-sixth;  and  in  1870  a  little  over  one- 
fifth.  At  the  last  date  the  inhabitants  of  cities  numbered  in 
all  8,071,875.     It   is  probable  that   not   only  the  absolute 


SOME    GENEK.VL    USES    OF    STATISTICAL   KXOWLEDGE.        341 

iunnl)er,  l)ut  the  proportion  of  the  total  ])()])ul;ition  resident 
in  cities,  will  be  found  in  1880  to  have  still  further  increased. 
Tt  will  not  be  surprising  if  12  million  of  persons,  constituting 
a  i'uU  quarter  of  the  population,  are  living  in  cities  of  8,000 
inhabitants  and  over." 

This  was  written  in  1879,  before  the  census  of  1880,  and  the 
anticipations  of  General  Walker  were  nearly  realised.  The 
town  population  in  1880,  in  towns  of  over  8,000  inhabitants, 
was  11,318,547,  or  22'5  per  cent — that  is,  about  equidistant 
between  a  fourth  and  a  fifth  of  the  whole  population,  instead 
of  being  about  a  fifth  only  as  in  1870.  If  smaller  towns  are 
included,  the  town  population  of  the  United  States  appears 
even  more  than  a  fourth,  being  in  round  figures  13  out  of  50 
millions. 

The  logic  of  these  facts  is  clear.  The  increase  of  population 
in  the  United  States  being  itself  a  proof  of  the  general 
improvement  of  the  masses  of  people  of  European  descent, 
even  assuming  that  we  are  only  to  compare  the  rude 
agricultural  labour  of  the  States  with  that  of  Europe,  then  if 
we  find  that  the  proportion  of  that  rude  labour,  even  in  the 
United  States,  is  diminishing  and  not  increasing,  that  the 
growth  of  population  is  in  the  towns,  we  must  raise  still  more 
our  idea  of  what  the  average  improvement  of  the  masses  has 
been.  We  ought  not  merely  to  compare  the  agricultural 
population  of  the  present  time  with  that  of  former  jK'riods, 
but  in  part  we  should  compare  town  labour,  which  is  still 
better  paid,  with  country  labour.  As  the  town  labour  of  the 
United  States  is  also  generally  more  highly  paid  than  that  of 
Europe,  we  have  in  this  fact  too  another  proof  of  the  raising 
of  tlie  Eurojjean  standard.  Here  the  adjustment  between 
Europe  and  the  United  States  is  likely  to  l)e  more  complete 
than  as  regards  rude  labour,  because  town  labour  is  more 
intelligent  and  mobile.     lu  this  enormous  growth  of  town 


342 


SOME   GENERAL   USES    OF   STATISTICAL   KNOWLEDGE. 


population  then,  that  is,  of  a  higher  class  of  labour,  we  see 
another  proof  of  the  magnitude  of  the  advance  of  the  masses. 
Not  only  is  rude  labour  so  much  better  off,  as  we  see  by  the 
growth  of  the  United  States,  but  the  proportion  of  that  rude 
labour  to  the  total  is  diminishing,  and  that  of  the  higher 
classes  of  labour  is  increasing. 

This  last  fact  can  be  brought  out  still  more  directly. 
Classifications  of  the  Census  are  often  difficult  to  follow, 
changes  being  made  from  period  to  period ;  but  in  the  last 
General  Eeport  of  the  Census  for  England  and  Wales,  an 
attempt  is  made  to  throw  light  on  this  very  question  of  the 
increase  or  decrease  of  "  labourers,"  by  whatever  term  they 
may  be  called.  The  result  is  seen  in  the  following  short 
table  which  I  extract  from  the  Eeport  (p.  37)  : — 


Agricultural  labourers 

General  labourers       

Eailway  navvies  and  platelayers 
Pioatl  labourers 

Total     


1871. 
Corrected 
Numbers. 


962,348 

500,273 

44,169 

8,186 


1,520,926 


870,798 

559.769 

58,847 

10,947 


1,500,361 


Along  with  a  general  increase  of  population,  therefore, 
between  1871  and  1881  in  England  and  Wales,  there  was  no 
increase  of  labourers  so  called.  The  increase  in  the  working 
population,  accordingly,  must  have  been  exclusively  in  the 
artisan  classes,  better  paid  than  the  labourers.  Coupling 
such  a  fact  with  the  increase  of  the  town  at  the  expense 
of  the  rural  population,  we  have  very  strong  additional 
evidence  in  favour  of  the  idea  of  the  vast  improvement  of 
the  masses.     The  rude  labour  itself  is  better  paid  to  the 


SOME   GENERAL    USES    OF   STATISTICAL   KNOWLEDGE.        343 

extent  of  100  per  cent,  or  more,  but  there  is  less  in  propor- 
tion of  that  rude  labour  than  there  was. 

In  this  connection,  also,  the  undoubted  fact  of  the  decrease 
of  pauperism  and  crime  becomes  important.  This  decrease 
helps  to  demonstrate  that  the  lowest  class  of  labour  is 
diminishing,  not  from  any  descent  of  the  labourer  into  the 
class  of  the  residuum  (an  extremely  improbable  thing,  we 
may  remark,  with  the  labourer's  remuneration  increasing), 
but  from  his  ascent  into  a  higher  class.  The  proportion  of 
the  residuum  itself,  and  even  its  absolute  amount,  is  de- 
creasing and  not  increasing,  so  that  the  lowest  labourer 
cannot  be  falling  into  it.  I  cannot  but  express  my  astonish- 
ment, I  may  add,  at  the  popular  impression  to  the  contrary 
which  appears  to  prevail  in  many  quarters.  The  old  records 
are  only  too  full  of  the  violence  and  crime  of  a  large  class  of 
the  very  poor,  half  mendicants,  half  robbers,  as. the  statutes 
against  masterful  beggars,  highway  robbery,  and  the  like, 
bear  witness.  That  beggary  in  the  old  sense  has  all  but 
disappeared  is  certain,  just  because  the  residuum  of  civilised 
societies  is  less  than  it  was. 

There  is  yet  another  statement  to  be  made  bearing  on  this 
point.  Not  only  are  the  lowest  classes  of  all  diminishing  in 
proportion  and  even  in  absolute  amount,  but  it  is  erpially 
certain  that  at  tlie  top  of  the  scale  the  proportion  of  society 
receiving  moderately  high  incomes  is  increasing.  I  may 
take  leave  on  this  head  to  refer  specially  to  the  table  printed 
in  my  inaugural  address  on  "  The  Progress  of  the  Working 
Classes  "  {postca,  p.  398),  showing  the  increase  of  the  number 
of  persons  at  different  amounts  of  income  Charged  under 
Schedule  D.  The  increase  in  incomes  from  £150  upwards 
was  there  shown  to  be  from  100,637  to  320,162  between 
1843  and  1880,  or  three  times  the  increase  of  population  in 
the  interval — we  are  speaking  of  England  alone — being  only 


344        SOME    GENERAL   USES   OF   STATISTICAL   KNOWLEDGE. 

from  about  16  millions  to  25^  millions,  or  GO  per  cent.  The 
indication  clearly  is  that  a  general  translation  of  classes  has 
been  in  progress — that  the  lowest  classes  of  all  are  diminish- 
ing and  the  highest  increasing.  It  is  of  course  just  probable 
that  the  average  income  of  the  intermediate  classes  may  not 
have  been  increasing  along  with  an  increase  of  its  numbers 
through  its  being  recruited  from  below,  but  such  a  move- 
ment, I  need  hardly  say,  would  be  extremely  improbable, 
being  contrary  to  the  direction  of  the  movement  as  observed 
both  at  the  bottom  and  the  top  of  the  scale.  It  is  here, 
moreover,  that  the  direct  evidence  of  statistical  investigators 
applies.  It  is  the  artisan  wages,  according  to  their  accounts, 
that  have  decisively  increased.  In  any  case  the  average 
income  of  a  society  composed  in  an  increased  measure  of 
artisans  has  to  be  compared  with  a  society  in  former  times 
in  which  labourers  bulked  more  largely.  The  wages  of  the 
artisan  may  not  have  increased  in  proportion,  though  the 
direct  evidence  is  that  they  have  increased  ;  but  at  any  rate 
there  are  more  artisans  relatively  than  there  were  who  are 
all  much  better  off  than  the  labourers,  whose  condition  at 
the  same  time  has  imdoubtedly  improved.* 

Before  passing  from  this  point  I  should  like  to  supple- 
ment these  figures  by  a  reference  to  some  statistics  as  to 
inhabited  houses.  There  are  certain  difficulties  in  the  way 
of  comparison  at  distant  dates  ;  still,  there  was  a  house  duty 
between  1812  and  1834,  as  there  is  a  house  duty  now ;  and 
although  the  bases  are  changed,  the  following  comparison,  I 
believe,  may  be  taken  as  approximately  correct : — 


*  These  points  arc  more  fully  discussed  in  my  "  Further  Notes," 
p.  409  et  se(_[. 


SOME    GENERAL   USES   OF   STATISTICAL    KNOWLEDGE.        345 


Comparison  of  Dwelling  Houses  and  Annual   Value  in  Great 
Britain  in  1833  and  1880,  ac'cm-ding  to  the  House  Duty 

Ecturm^. 


Houses  above  £20  annual  vahio 
£15  and  under  £20 
„           £10  and  under  £15 
Houses  under  £10      


Total 


1880. 


No. 

713,000 

i      425,000 

(     755.000 

3,09 1 ,000 

4,984,000 


Here  the  total  increase  of  houses  is  between  85  and  90 
per  cent,  as  compared  with  an  increase  of  population  in  the 
interval  of  about  80  per  cent. ;  but  the  increase  of  houses 
under  £10  annual  value  is  less  than  40  per  cent.,  or  about 
800,000    in   number   altogether.     On    the   other   hand   the 
increase  in  houses  between  £10  and  £20  is  no  less  than 
952,000  in  number— more  than  the  increase  of  houses  under 
£10— and  the  percentage  of  increase  is  over  300  per  cent. ; 
and  the  increase  of  houses  above  £20  annual  value  is  about 
500,000,  and  the  percentage  of  increase  is  about  230  per 
cent.     There  has  accordingly  been  quite  a  disproportionate 
increase  of  houses  above  £10  annual  value,  showing  that 
there  has  been  a  translation  of  classes  into  houses  of  higher 
annual  value.     We  have  not  the  details  for  houses  under 
£10,  but  the  presumption  is  that  while  the  total  increase  is 
under  40  per  cent,  the  increase  has  been  at  the  top  and  not 
at  the  bottom  of  the  scale.     These  statistics  are  of  course 
open  to  the  argument  that  increase  of  house  rent  is  a  proof 
of  the  increased  cost  of  living,  and  not  a  proof  of  better 
^  accommodation  for  the  inhabitants ;    but  the  argument   is 

•  This  figure  is  arrived  at  by  deducting  the  houses  subject  to  duty 
from  the  total  number  of  inhabited  houses. 


346        SOME    GENERAL   USES    OF   STATISTICAL    KNOWLEDGE. 

self-contradictory.  The  wages  of  labour  being  ultimately 
the  main  element  in  the  cost  of  producing  houses,  the  in- 
creased rent,  if  it  is  a  sign  of  the  increased  cost  of  producing 
houses,  becomes  a  proof  that  the  wages  of  the  builders  of 
houses  have  increased — probably  that  they  have  greatly 
increased,  seeing  that  in  various  directions  labour-saving 
machinery  has  been  introduced  and  the  cost  of  production 
has  thereby  been  diminished.  On  the  other  hand,  if  wages 
have  not  increased,  or  if  they  have  not  increased  more  than 
by  the  amount  of  the  savings  effected  in  production,  then  the 
increased  house  rent  implies  enormously  improved  accommo- 
dation. The  latter  hypothesis  aj)pears  the  more  probable  ; 
but  in  either  case  an  advance  of  the  masses  is  demon- 
strated.* That  much  higher  rents  are  paid  is  a  proof  of 
the  rise  in  the  scale  of  living.  The  figures  fully  confirm  the 
inferences  to  be  drawn  from  the  increase  of  incomes  liable 
under  Schedule  D.  already  referred  to. 

The  evidence  is  thus  cumulative.  In  addition  to  the 
direct  evidence  of  statisticians  who  have  investigated  the 
subject,  and  who  find  a  general  improvement  among  wage 
earners,  the  masses  of  the  community,  it  appears  that  the 
great  facts  of  the  time — the  rapid  increase  of  population 
itself;  the  special  increase  in  the  United  States  and  in  the 
colonies,  where  the  masses  are  better  off  than  the  masses  in 
Europe ;  the  relatively  greater  increase  of  the  town  popula- 
tion ;  the  diminution  of  the  lowest  class  of  labourers,  coupled 
with  an  increase  in  the  remuneration  of  the  class  and  with  a 
diminution  of  crime  and  pauperism  ;  and  the  increase  of  the 


*  Much  stress  is  laid  upon  competition  in  towns  as  the  cause  of  the 
rise  of  rent;  but  the  bulk  of  the  houses  are  of  course  so  situated  that 
the  element  of  ground  rent  counts  for  very  little  in  the  general 
problem. 


SOME   GENERAL   USES    OF    STATISTICAL    KNOWLEDGE.         847 

workers  at  the  top  of  the  scale,  as  gliown  by  the  returns  of 
tlie  income  tax  and  of  lionse  duty, — all  point  to  the  one 
conclusion  that  there  has  been  a  great  increase  of  well-beiii;^' 
tliroughout  all  classes  of  society,  the  numbers  of  the  better- 
off  classes  all  increasing,  and  of  the  lower  classes  and  of  the 
residuum  diminishing.  AVe  may  thus  conclude  that  the 
vast  increase  of  wealth  and  resources,  which  has  un- 
doubtedly taken  place  in  the  last  century,  has  not  been  an 
increase  for  the  benefit  of  a  few,  but  that  all  classes  have 
participated,  and  not  least  the  artisan  and  labouring  classes, 
the  masses  of  the  community.  At  least,  this  is  true  of 
England,  France,  Germany,  and  the  United  States,  about 
which  we  know  most.  To  a  less  degree,  however,  we  may 
assume,  there  has  likewise  been  an  improvement  in  Eussia 
and  the  rest  of  Europe.  Like  causes  produce  like  effects, 
and  these  communities  must  all  be  influenced  in  the  same 
direction  by  the  general  improvement  in  the  neighbouring 
communities.  In  other  words,  then,  the  vast  increase  of 
population  with  which  we  have  been  dealing  is  an  increase 
of  population  wliich  is  generally  improving  in  well-being, 
the  improvement  in  some  large  parts  of  these  masses  being 
literally  immense. 

It  is  unnecessary  perhaps  to  do  so,  as  no  figures  on  the 
subject  can  be  very  exact,  but  it  may  be  useful  to  endeavour 
to  state  numerically  the  masses  of  the  different  classes  of 
modern  society,  in  order  to  give  some  notion  of  the  magni- 
tude of  the  change  from  former  times.  Using  the  figures  as 
to  house  duty  already  given,  and  allowing  7  persons  per 
house  in  houses  above  £20,  6  persons  in  houses  between  £10 
and  £20,  and  5^  persons  in  houses  nnder  the  £10  limit  (so 
as  to  allow  for  farmhouses,  &c.,  not  included  in  the  dwelling 
houses  so  called),  we  should  classify  the  population  of  Great 
Britain  in  1880  as  follows  : — 


348        SOME   GENERAL    USES    OF    STATISTICAL   KNOWLEDGE. 


Number  of 
Houses. 

Number  of 
Peopie. 

In  houses  above  £20 

„      „      £10  and  under  £20      .. 
„  under  £10 

713,000 
1,180,000 
9,091,000 

5,000,000 

7,000,000 

17,000,000 

Total 

4,984,000 

29,000,000 

Making  some  addition  to  these  figures  so  as  to  include 
Ireland,  viz.,  one-tenth  to  the  population  in  houses  above 
£20,  one-seventh  to  the  population  in  houses  between  £10 
and  £20,  and  nearly  one-fifth  to  the  population  in  houses 
under  £10,  we  should  get  the  following  classification  for  the 
United  Kingdom,  as  for  the  year  1880  : — 

In  houses  above  £20 5,500,000 

„         above  £10  and  under  £20      ..     8,000,000 
„         under  £10 20,500,000 

Total 34,000,000 


In  other  words,  the  population  living  in  houses  above  £20 
rent,  is  very  nearly  half  the  population  living  in  the  country 
a  century  ago ;  it  is  more  than  the  population  of  all  England, 
according  to  the  best  estimates,  in  the  time  of  William  III., 
and  it  is  more  than  twice  the  estimated  population  of 
England  at  the  beginning  of  the  fifteenth  century  after  the 
Black  Death  had  been  recovered  from.  In  other  words, 
there  is  a  whole  nation  within  the  United  Kin"dom  livinfj 
in  circumstances  which  are  better  than  those  of  even  the 
highest  classes  down  to  a  quite  recent  period.  The  highest 
class  is  in  fact  to  be  counted  by  millions,  where  it  was 
formerly  counted  by  thousands.  There  are,  no  doubt,  many 
grades  among  the  people  living  in  houses  above  the  £20 


SOME   GENERAL   USES    OF   STATISTICAL    KNOWLEDGE.        349 

limit,  and  the  standard  of  liviii;^  lias  been  so  raised  that 
there  is  a  new  highest  class — an  upper  ten — which  is  only  a 
small  percentage  of  the  people  living  in  houses  above  £20  ; 
l)ut  the  actual  comforts  and  surroundings  of  people  who  live 
in  sucli  houses  are  the  tilings  here  in  ([uestiun,  and  in 
command  of  the  means  of  civilisation,  of  real  comforts  and 
luxuries,  the  people  in  such  houses  imdoubtedly  excel  the 
upper  ten  of  a  former  time. 

The  class  below  this  amounts  to  8  millions,  a  rather 
larger  nation — two-thirds  of  the  whole  people  a  hundred 
years  ago,  50  per  cent,  more  than  the  whole  population  of 
England  in  the  time  of  William  III.,  and  nearly  three  times 
the  population  at  the  beginning  of  the  fifteenth  century.  If 
we  allow  that  the  class  in  houses  above  £20  comprises,  as  a 
rule,  the  lower  middle  class,  though  there  are  certainly  some 
artisans  included,  then  we  may  say  that  the  upper  classes 
of  artisans,  and  the  smaller  farmers  and  shopkeepers  are 
generally  in  the  houses  between  £10  and  £20,  with  incomes 
from  all  sources  of  over  £100  per  annum,  allowing  that  rent 
is  about  a  seventh  or  eighth  of  the  income.  I  cannot  help 
thinking  that  these  masses  compare  very  well  with  the 
yeomen,  the  freeholders  and  farmers  of  former  times.  Many 
of  them,  in  fact,  in  opportunities  of  civilisation  and  healthy 
conditions  of  life  are  on  a  par  with  all  but  the  very  highest 
classes  in  former  times. 

Coming  to  the  class  in  houses  under  £10,  about  20  millions 
in  all,  I  should  say  that  if  we  deduct  about  one-fourth  for 
the  lowest  class  of  labourers  and  the  residuum,  which  I 
consider  an  ample  allowance,  there  would  remain  1."  millions 
of  people  whose  conditions  of  life  are  still  tolerably  satis- 
factory— the  inferior  army  of  artisans  and  the  l»etter  class  of 
unskilled  labourers.  I  hardly  think  that  if  we  look  at  the 
cheapness  of  commodities  and  the  opportunities  of  education. 


350        SOME    GENERAL   USES    OF    STATISTICAL   KNOWLEDGE. 

this  class  can  Lo  considered  much  inferior  to  the  yeoman  of 
former  times  all  round — certainly  they  are  not  inferior  to 
the  masses  of  mechanics  and  labourers  of  any  former  time. 
Of  course  the  existence  of  the  mass  of  5  millions  below  is  a 
stain  upon  our  civilisation.  The  actual  "  residuum  "  may  be 
very  small,  but  there  are  still  too  many  of  the  very  poor. 
Even  the  very  poor,  however,  are  undoubtedly  better  off 
than  the  very  poor  of  former  times  ;  and  it  may  be  doubted 
if  they  are  more  numerous  than  they  were  a  century  ago, 
when  half  the  people  of  the  United  Kingdom — it  must  be 
remembered  that  Ireland  and  Scotland  are  included  as  well  as 
England — wxre  in  that  category.  In  the  time  of  William  III., 
Gregory  King  estimated  that  more  than  half  the  popu- 
lation of  England  at  that  time  was  very  poor,  and  either 
wholly  or  semi-pauperised;  although  population  increased, 
there  was  certainly  no  great  improvement  on  this  state  of 
things  down  to  about  the  time  of  the  French  Eevolution. 

Thus  the  society  of  modern  times,  taking  England  as  a 
model,  includes  an  upper  class  quite  as  numerous  as  the 
wliole  nation  at  a  very  recent  date ;  a  class  of  superior 
artisans,  small  farmers,  and  shopkeepers  even  more  nu- 
merous than  the  first,  and  living  in  greater  comfort  than  the 
so-called  middle-class,  the  yeomen  of  former  times,  which 
was  only  a  small  part  of  the  community ;  and  a  class  of 
inferior  artisans  and  labourers,  more  numerous  still,  occupy- 
ing the  place  in  society  of  the  poor  of  a  former  time,  the 
mass  of  the  community  then,  but  approaching  the  former 
middle-class  in  its  conditions  of  living ;  finally,  an  inferior 
class,  the  smallest  of  all,  corresponding  to  the  very  poor  and 
the  residuum  of  former  times,  but  the  residuum  now  included 
being  very  small,  and  much  smaller  in  proj)ortion  than  it 
was.  Not  only  then  have  modern  societies  increased  mightily 
in  numbers,  but  the  wealth  has  been  diffused  very  largely. 


SOME   GENERAL   USES    OF   STATISTIC^VL    KNOWLEDGE.        351 

The  mass  of  tlie  ^VL'll-o^l■  far  exceeds  the  whole  population  of 
very  recent  times. 

Before  coming  to  a  conclusion,  let  me  add  one  more  re- 
mark by  way  of  explaining  a  ]»eculiar  misapprehension  of 
these  figures  as  to  wealth  and  income,  which  perhaps  helps 
to  account  for  the  Socialist  version  of  modern  society  as  an 
exploiting  of  the  poor  by  the  rich,  and  the  readiness  with 
which  that  version  is  accepted.  The  misapi)rehension  is  not 
unnatural.  See,  it  is  said,  how  the  community  of  England 
produces  1200  million  pounds  a  year,  but  the  "  w^orkers  " 
only  get  a  fraction  of  this  sum.  The  notion  is  thereby 
created  that  the  labourers,  so-called,  produce  the  whole  1200 
million  pounds,  and  that  "  others  "  consume  the  larger  part. 
In  actual  fact,  whatever  may  be  the  truth  as  to  the  division 
of  national  production  among  different  classes,  and  whatever 
that  production  may  be,  the  estimates  of  national  income  are 
not  available  for  such  comparisons.  Income  is  not  identical 
with  production  in  the  sense  understood  by  Socialist  agitators. 
Look  only  at  the  way  it  is  composed.  Sir  Frederick  Leigh- 
ton,  ]\Ir.  Millais,  Mr.  Orchardson,  Mr.  Alma-Tadema,  and 
many  more  paint  pictures.  Their  incomes  of  £2000,  £5000, 
£10,000,  and  possibly  in  one  or  two  instances  even  larger 
amounts  go  into  Schedule  D.,  and  make  up  a  part  of  the 
1200  million  i)ounds,  which  excites  the  envy  of  the  Socialist. 
The  ])hysician's,  the  lawyer's,  the  engineer's,  tlie  architect's 
anil  other  fees,  all  fall  into  the  same  account.  The  "  wages 
of  superintendence  "  of  the  capitalist  who  administers  his 
own  capital,  often  a  very  serious  business,  also  make  part  of 
the  same  sum.  It  is  quite  manifest,  then,  that  whether  the 
things  which  these  workers  produce  are  of  value  or  not,  the 
pco]ile  who  produce  them  are  not  the  proletariat,  but  the 
very  people  who  make  the  return  to  the  income  tax.     Other 


352        SOME    GEXERAL   USES   OF   STATISTICAL    KNOWLEDGE. 

workers,  in  claiming  a  share  of  that  income,  are  claiming  a 
share  of  what  workers  like  themselves  produce.  Out  of  a 
total  sum  of  576  million  pounds  returned  to  the  income  tax 
in  1879-80,  no  less  than  165  million  pounds  returned  in 
Schedule  D.  as  that  of  trades  and  professions  was  of  this 
character — i.e.,  it  was  the  production  of  the  very  people  who 
were  charged,  and  the  value  of  it  was  paid  to  them  as  wages. 
Similarly,  the  farming  income  returned  under  Schedule  B. 
was  very  much  of  the  same  character,  the  farmers  earning 
the  70  million  pounds  credited  to  them,  not  as  capitalists, 
l)ut  largely  as  workers. 

On  these  and  other  grounds  I  concluded  in  my  address  on 
"  The  Progress  of  the  Working  Classes,"  that  the  total  income 
of  capital  in  the  United  Kingdom  could  not  be  put  at  more 
than  400,  out  of  1200  million  pounds,  or  one-third  of  the 
total,  and  I  am  inclined  to  think  this  sum  much  above  the 
mark.  In  any  case,  in  a  question  as  between  labourers  and 
capitalists,  the  fact  has  to  be  kept  in  mind  as  to  what  the 
composition  of  the  1200  million  pounds  really  is.  The 
masses  of  workmen  in  no  sense  are  the  producers  of  that 
value — they  may  be  of  opinion  that  what  they  do  produce 
should  be  valued  at  that  sum,  artists  and  other  highly  paid 
workmen  having  their  productions  valued  at  less;  but  in 
actual  fact  there  is  a  large  amount  of  production  by  workers 
which  is  not  theirs. 

What  is  perhaps  still  more  important,  the  classes  engaged 
in  this  liiglily  paid  production  very  largely  exchange  among 
themselves.  The  architect,  or  surveyor,  or  merchant,  pays 
high  fees  to  the  physician  or  lawyer ;  all  of  them  in  turn 
pay  high  fees  to  masters  and  tutors  for  the  education  of  their 
children ;  the  capitalist  who  receives  a  high  rent  for  his 
houses,  in  turn  pays  it  away  to  the  lawyers,  doctors,  or  other 
professional  men  who  live  in  them.     It  is  sometimes  sup- 


SOME   GENERAL    USES    OF   STATISTICAL   KNOWLEDGE.        353 

posed  that  in  this  way  income  is  counted  twice  over  and 
more,  but  in  strictness  income  is  counted  only  once ;  only 
wliat  we  get,  when  we  have  the  sum  of  all,  is  merely  the 
addition  of  the  sums  at  which  the  different  classes  of  the 
community  exchange  their  services  with  each  other,  and  it 
does  not  follow  that  there  is  a  general  fund  of  production  to 
which  all  contribute,  and  which  can  be  divided.  The  ser- 
vices are  now  exchanged  in  part  between  small  groups  in 
society,  and  such  exchanges,  counting  very  largely  in  the 
aggregate,  go  to  swell  the  total ;  but  to  some  extent  the 
whole  thing  is  merely  nominal — it  pleases  those  concerned 
to  count  them  for  so  much,  and  that  is  all.  There  is  no 
corresponding  "  production  "  to  be  divided. 

Much  the  same  may  be  said  of  the  superior  class  of 
artisans.  The  good  things  of  which  they  obtain  command 
by  their  labour  are  not  the  things  which  the  masses  of 
unskilled  W'orkmen  produce,  but  the  things  which  they 
and  others  of  their  own  class  produce.  The  exchanges  are 
mutual,  and  the  masses  of  inferior  workmen  are  out  of  it 
altogether.  It  is  probable,  besides,  that  as  the  consumption 
of  every  worker  approaches  very  nearly  his  production,  the 
condition  of  the  production  itself  is  that  the  worker  should 
have  an  equivalent  to  consume.  Strictly  speaking,  he  could 
not  produce  at  all  at  less  wages  than  he  receives.  An  artist 
or  an  author  requires  a  certain  medium  ;  the  "  production  " 
of  a  clever  engine-driver,  or  other  superior  artisan,  would 
equally  be  impossible  unless  with  a  certain  connnand  of  food 
and  other  commodities  ;  their  nerves  and  brains  would  be 
imequal  to  the  strain. 

The  dream  of  the  Socialist  that  there  is  a  common  fund 
produced  of  which  certain  workmen  do  not  get  their  fair 
share  is  thus  a  pure  illusion.  The  producers,  to  a  larger 
extent  than  is  commonly  supposed,  are  the  consumers,  and 

II.  2   A 


354        SOME   GENEKAX    USES    OF   STATISTICAL    KNOWLEDGE. 

the  production  is  a  function  of  the  consumption  itself  As 
to  the  share  of  the  capitalist,  I  am  old-fashioned  enough  to 
think  that  capital  and  property  are  good  institutions,  that  a 
leisured  class  in  the  community,  such  as  the  saving  of  capital 
makes  possible,  is  not  a  bad  thing ;  but  apart  from  this,  it  is 
also  quite  clear  that  capitalists  even  now  only  earn  their 
income  by  assisting  the  different  producers,  whose  exchanges 
are  principally  vdih  each  other,  and  the  toll  they  levy,  if  the 
return  to  capital  is  to  be  called  a  toll,  is  not  levied  on  the 
produce  of  the  workers  who  are  least  paid,  but  on  the 
produce  of  those  who  are  paid  highly.  It  is  the  highly  paid 
who  use,  and  who  can  use,  the  most  machinery,  i.e.,  the  most 
capital,  and  who  have  themselves  cost  the  largest  sum  to 
become  efScient  producers.  The  unskilled  labourer  cannot 
work  the  machines  which  are  essential  to  modern  produc- 
tion ;  if  left  to  himself  he  would  be  unable  to  carry  on  the 
production ;  it  is  his  misfortune,  if  not  his  fault,  that  he  is 
so  poorly  equipped  as  to  be  able  to  produce  so  little. 

The  point  has  also  been  insufficiently  attended  to,  I  think, 
that  the  income  of  capital  is  largely  not  spent  by  the 
capitalist  classes  so  called.  The  bulk  of  it  is  saved,  and 
gives  rise  to  the  employment  of  labour  in  another  way. 
i\Ir.  Atkinson  estimates  that  hardly  a  tenth  part  of  the  pro- 
duction of  the  United  States  is  consumed  by  the  owners  of 
capital,  and  although  the  proportion  in  this  country  is 
perhaps  larger,  I  doubt  if  it  is  very  much  larger,  although 
the  nominal  income  of  capital  reckoned  by  the  income  tax 
returns  appears  to  be  a  tldrd  or  a  fourth  of  the  total  income 
of  the  countr}'.  How  essential  the  reinvestment  of  capital 
is  with  a  growing  population  need  hardly  be  dwelt  upon, 
and  it  is  a  proof  of  the  compensations  that  are  to  be  found 
in  the  natural  order  of  modern  society,  that  the  very  excess 
of  private  capital   leads   to  enormous   reinvestments,  with 


SOME   GENERAL   USES   OF   STATISTICAL   KNO^VXEDGE.        355 

increased  employ iiieiit  for  labour,  and  a  diminution  of  return 
to  the  capitalist  himself. 

I  trust  this  digression  will  be  found  not  out  of  place.  It 
seems  to  follow  naturally  from  a  discussion  of  the  general 
progress  of  European  society  in  population  and  wealth.  It 
helps  us  to  understand,  I  think,  the  nature  of  the  modern 
industrial  organisation,  with  its  vast  masses  of  higlily  paid 
workers,  many  actually  highly  paid  in  absolute  amount,  and 
almost  all  highly  paid  compared  with  former  times,  and  to 
whom  the  capitalist  is  really  only  a  servant,  though  he 
seems  to  be  master. 

Passing  now  to  a  conclusion,  the  first  question  to  ask 
appears  to  be  as  to  the  causes  of  this  vast  development  of 
numbers  and  wealth  in  modern  times.  There  is  nothinL' 
like  it  in  past  history,  England,  with  about  2i  millions  of 
population  in  the  fourteenth  century,  about  the  time  of  the 
Black  Death,  had  still  no  more  than  5  millions  at  the  end 
of  the  seventeenth  century.  France,  which  was  larger  and 
richer,  was  more  populous,  but  in  the  two  hundred  years 
preceding  the  end  of  the  seventeenth  century  the  population 
only  doubled.  Piussia,  in  like  manner,  had  less  than  G 
millions  when  it  begins  to  be  noticed  in  the  fifteenth 
century  in  European  annals,  and  two  centuries  after  it  had 
only  14  millions.  In  other  countries  there  was  equally  slow 
progress,  down  to  about  tlie  end  of  the  seventeenth  century, 
while  in  the  century  following,  although  a  start  forward  was 
made,  the  progress  was  slow  compared  with  what  it  has  since 
been.  An  increase  like  that  of  the  United  States,  from  3  to 
60  millions  in  a  century,  is  altogether  unexampled,  and  this 
increase,  as  we  have  seen,  is  only  part  of  a  larger  movement. 
It  cannot  but  be  interesting  to  understand,  tlierefore,  wliat 
are  the  causes  of  this  remarkable  development,  and  in  view 

2  A  2 


356        SOME   GENERAL    USES    OF   STATISTICAL   KNOWLEDGE. 

of  the  increase  of  population  still  going  on,  whether  these 
causes  are  likely  to  be  permanent. 

There  are  four  causes  which  appear  all  to  have  contributed 
very  powerfully  to  the  general  result,  and  which  have  acted 
and  reacted  on  each  other. 

First  and  foremost  I  would  put  the  growth  of  strong 
central  governments,  covering  large  areas,  with  power  to  put 
down  all  minor  disorders,  though  they  were  themselves,  for 
the  most  part,  militant  governments.  To  some  extent 
England  began  to  benefit  from  this  cause  not  long  after  the 
Xorman  Conquest,  but  certainly  not  all  parts  of  the  United 
Kingdom,  Ireland  and  Scotland  especially  being  subject  to 
local  disturbances  and  wars  down  to  a  very  late  period.  In 
France,  again,  the  start  forward  in  prosperity  begins  with 
Louis  XIV.,  who  was  strong  enough  at  home  while  militant 
abroad,  and  who  was  only  strong  abroad  because  there  was 
peace  at  home.  Eussia  begins  to  advance  rapidly  again  from 
the  time  of  Peter  the  Great,  that  is,  from  about  the  end  of 
the  seventeenth  century,  the  effect  in  Eussia  being  doubled 
by  the  peace  at  home  and  by  the  strengtli  of  the  Government 
to  drive  the  Turks  out  of  the  rich  southern  provinces  and  so 
to  gain  these  provinces  for  settlement.  The  establishment  of 
a  strong  government  in  Prussia  at  the  beginning  of  last 
century  is  also  coincident  with  greater  peace  at  home, 
although  the  Prussian  monarchy  was  militant  enough. 
There  have  no  doubt  been  great  wars  during  these  hundred 
years,  and  in  some  parts  of  Europe  these  wars  were  most 
destructive  at  long  intervals ;  the  military  budgets  of  the 
Great  Powers  have  also  been  enormous,  and  Jiave  given  rise 
to  incessant  complaints  and  apprehensions ;  but  the  internal 
peace  appears  to  have  compensated  all  the  evils  of  militarism 
on  a  large  scale,  and  to  have  given  the  nations  time  for  the 
arts  of  peace. 


SOME   GENERAL    USES   OF   STATISTICAL    KNOWLF.DGE.        357 

As  the  view  is  somewhat  din'ercnt  from  the  cuinuion  one, 
I  may  be  permitted  to  point  out  also  that  the  period  of  actual 
war,  if  we  take  any  one  nation  separately,  and  especially  if 
we  take  any  one  country  as  being  itself  the  seat  of  war,  has 
been  much  less  than  is  commonly  supposed.  To  take 
Prussia,  for  instance ;  it  would  strike  most  peoj)le  with  sur- 
prise, I  think,  to  be  told  tliat  Prussia  has  only  been  in  a 
state  of  war  for  about  three  years  during  the  present  century, 
although  Prussia,  now  Germany,  is  jmv  excellence  the  military 
State  of  Europe  at  the  present  day.  Yet  this  is  the  literal 
fact.  The  Jena  campaign  in  1806  lasted  a  few  months  only  ; 
the  campaign  with  the  Allies  only  lasted  about  a  year,  from 
the  battle  of  Leipsic  in  1813,  to  the  overthrow  of  Napoleon 
the  year  after ;  the  Waterloo  camj^aign  was  one  of  four  days 
only,  and  the  state  of  war  had  lasted  but  a  hundred  days  ; 
the  Danish  war  in  IBG-l  was  also  short;  equally  so  the  war 
with  Austria  in  18GG  ;  and  finally  the  war  with  France  in 
1870-71,  from  the  declaration  of  war  in  July,  1870,  to  the 
capitulation  of  Paris  in  January  following,  was  one  of  hardly 
more  than  six  months.  The  record  of  Austria  is  almost  as 
clear  of  the  actual  state  of  war.  One  short  camj)aign  in 
1800,  ending  in  the  defeat  of  Marengo ;  another  short  cam- 
paign in  1805,  ending  with  Austerlitz  ;  another  campaign  in 
1809,  ending  with  Wagram ;  a  year  of  fighting  in  1813-14; 
a  short  war  with  France  and  Italy  in  1859  ;  and  finally  the 
Danish  war  and  the  war  with  Prussia  in  18G4  and  1866 — 
make  up  the  Austrian  account.  The  state  of  war  during  the 
present  century  has  not  lasted  five  years,  even  if  we  throw 
in  the  war  of  the  Hungarian  revolution  in  1848-49.  The 
Itussian  account  is  less  clear,  but  even  in  the  case  of  Pussia 
there  have  not  been  ten  years  of  European  warfare.  As 
regards  France  and  England,  which  were  engaged  for  an 
exceptionally  long  period   in  warfare,  beginning  after   the 


358        SOME   GENEKAL   USES    OF    STATISTICAL    KNO^VLEDGE. 

French  Eevolution,  and  lasting  with  little  intermission  until 
1815,  the  peculiarity  was,  with  the  exception  of  a  short 
period  of  invasion  in  France  by  Prussians  and  Austrians 
after  the  French  Eevolution,  and  another  short  period  in 
1814,  that  neither  country  was  the  theatre  of  war.  Both 
countries  were  left  entirely  free  for  industrial  development 
at  home.  In  a  certain  sense  Europe  for  quarter  of  a  century 
before  1815  was  involved  in  war,  but  the  theatre  of  actual 
fighting  was  constantly  sliifting,  and  it  is  not  true  that 
Europe  was  ravaged  by  war  the  whole  of  that  time. 

The  conclusion  is  that  although  it  may  not  be  true  to  say 
that  the  last  hundred  years  have  been  more  peaceful  than 
any  former  period  of  European  history,  yet  the  constitution 
(jf  strong  central  governments  has  diminished  the  actual  area 
of  warfare,  and  the  actual  duration  of  the  state  of  war,  so 
sensibly  as  to  give  far  more  time  than  in  any  former  age  for 
industrial  development.  I  think  it  is  possible  and  probable 
that  under  the  new  conditions,  with  boundaries  well  settled, 
and  the  Great  Powers  conscious  of  the  mischief  they  can 
inflict  on  each  other,  and  the  little  gain  they  can  hope  for  in 
war,  the  limitations  of  the  area  of  warfare,  and  of  the  duration 
of  the  state  of  war,  will  continue  and  even  increase. 

The  next  cause  of  the  rapid  improvement  in  population 
and  wealth  in  the  last  hundred  years  appears  to  have  been 
the  gi'eat  advance  in  practical  agriculture  which  took  place 
in  the  course  of  last  century.  I  must  speak  with  diffidence 
on  such  a  subject ;  but  in  England  at  least  the  improvement 
of  the  breed  of  cattle,  the  introduction  of  root  crops  and 
winter  grasses,  and  later  on  systematic  and  more  skilled 
drainage,  coupled  with  the  enclosure  of  common  and  waste 
lands,  appear  to  have  combined  to  increase  greatly  the 
agricultural  production  of  the  country.  Such  improvements 
would  not  be  confined  to  one  country,  but  would  of  course 


SOME   GENEllAL    USES    OF   STATISTICAL    KNOWLEDGE.        059 

spread,  and  Continental  writers  accordingly  record  a  great 
increase  of  agricultural  production  during  the  present  cen- 
tury. Of  course  there  could  have  been  no  such  improve- 
ments witliout  internal  peace,  the  one  cause  thus  co-operating 
with  the  other. 

As  a  third  cause  I  need  only  note  that  to  last  century 
belongs  the  steam-engine  and  other  inventions  and  the 
beginning  of  a  vast  development  of  manufacturing,  which  has 
since  been  coincident  with  the  vast  increase  of  population. 

Finally,  and  not  less  important  than  any,  there  has  come 
the  discovery  and  opening  out  of  new  lands  in  the  west  of 
North  America,  in  Australasia,  and  in  South  America, 
suitable  for  European  colonisation,  Eussia  having  been 
already  provided  with  a  similar  field  at  home,  which  it 
obtained  the  practical  use  of  last  century  by  expellimr  the 
Turks.  This  opening  out  of  new  and  fertile  land  has  cer- 
tainly been  a  godsend  to  the  European  race.  Coming  as  it 
did  at  the  very  time  when  internal  peace  and  discoveries  in 
arts  and  manufactures  were  stimulating  the  growth  of  popu- 
lation, it  has  provided  an  outlet  for  rude  labour,  which  has, 
along  with,  the  other  causes  in  operation,  removed  every 
external  check  to  an  increase  of  population  and  wealth.  But 
for  these  new  and  fertile  lands,  it  is  impossible  to  imagine 
how  the  recent  development  could  have  taken  place.  A 
check  must  have  come  from  somewhere,  and  the  masses 
could  not  have  been  so  well  off  as  they  are  now. 

Will  these  causes  or  conditions  be  permanent  or  not  ?  So 
far  as  can  be  judged,  three  of  them  may  be,  but  the  last  is 
necessarily  transient.  The  great  nations  may  continue 
peaceful ;  agricultural  production  may  go  on  improving ;  the 
development  of  inventions  and  manufacturing  may  also  go 
on  almost  indefinitely.  So  much  cannot  be  affirmed  with 
certainty.     It  remains  to  be  seen  whether  tlic  Iiuman  race 


3 GO        SOME    GENERAL    USES   OF   STATISTICAL    KNOWLEDGE 

has  power  to  maintain  so  complex  an  industrial  organisation, 
along  with  a  steady  and  enormons  increase  of  numbers, 
as  we  possess,  so  dependent  on  scientific  knowledge  of  every 
kind,  and  making  such  heavy  calls  on  brain  and  nerves. 
How  can  we  know  beforehand  that  the  proportion  of  skilled 
labour  necessary  for  the  very  existence  of  such  a  society  will 
be  maintained  ?  But  while  there  is  a  possibility  so  far  of 
existing  conditions  being  maintained,  it  is  equally  certain 
that  the  power  of  resorting  to  new  lands  is  rapidly  being 
lost.  If  population  increases  at  all  at  its  present  rate  for 
only  another  century,  the  habitable  earth  available  for 
European  races  will  be  filled  up  as  the  existing  territory 
they  occupy  is  already  filled  up.  The  race  accordingly  will 
have  to  depend,  after  an  interval  which  is  very  brief  in 
human  history,  on  the  power  of  increasing  production  from 
the  same  soil,  and  not  on  the  resort  to  new  lands.  So  great 
a  change  must  affect  materially  the  whole  conditions  of  the 
recent  progress. 

It  is  impossible  not  to  revert  in  such  a  connection  to  the 
Malthusian  theory.  Malthus  is  thought  to  have  been  dis- 
credited because  he  is  supposed  to  have  asserted,  waiting  at 
the  beginning  of  the  century,  that  the  population  of  the 
world,  and  particularly  of  England,  would  not  in  fact  go  on 
increasing,  as  it  really  has  done,  because  there  would  not  be 
means  of  subsistence.  Malthus,  however,  had  made  no  pre- 
diction in  the  strict  sense  of  the  word.  He  had  drawn  out 
from  experience  that  the  human  race  tended  to  increase 
faster  than  the  means  of  subsistence,  its  natural  increase 
being  in  geometrical  ratio,  and  the  increase  of  its  means'  of 
subsistence  in  arithmetical  ratio  only ;  so  that  population 
had  only  been  kept  down  in  past  times  by  M'ar,  famine,  and 
disease   as   the  consequence  of  famine.     He  was  bound  to 


SOME   GENERAL    USES    OF   STATISTICAL   KNO'WLEDGE,        301 

anticipate  that  a  cuntiiiuauce  of  the  process  ^vouId  expose 
the  race  once  more  to  the  ojjeratioii  of  these  natural  checks, 
or  to  a  descent  of  the  masses  in  the  scale  of  living,  or  to  both 
these  evils.  That  in  fact  the  new  experience  has  been 
different  from  the  former  one,  and  owing  to  various  causes 
the  means  of  subsistence  have  increased  faster  than  tin- 
population,  even  when  increasing  at  a  jMalthusian  rate,  is 
no  disproof  surely  of  the  teaching  of  ]\Ialthus.  His  statis- 
tical inquiries  into  the  past  remain  as  valuable  as  ever.  If 
the  causes  of  the  new  experience  liave  been  transient  only, 
and  one  of  them  at  least  has  been  transient,  while  we  do  not 
know  how  the  future  will  shape  itself  as  regards  the  others, 
then  it  is  not  quite  so  certain  even  yet  that  the  gloomy 
anticipations  of  Malthus  were  wholly  misplaced.  A  struggle 
by  large  portions  of  the  race  against  a  fall  in  the  scale  of 
living  may  not  be  so  far  off  as  it  appears. 

In  one  respect  at  least  Malthus  has  been  confirmed  by  the 
event.  Among  all  the  illustrations  he  was  able  to  give  of 
the  tendency  of  the  human  race  to  increase  with  an  increase 
of  the  means  of  subsistence  he  could  adduce  nothmg  so 
colossal  as  the  experience  of  the  last  hundred  years.  On 
this  head  he  is  fully  justified.  Here  again  the  experience 
may  change  in  time.  The  race  may  change  in  some  vital 
characteristic  as  that  of  Trance  seems  to  have  changed,  at 
least  in  France  itself,  for  the  Canadian  French  increase 
rapidly  enough.  Until  the  present  time,  however,  the  ex- 
perience since  Malthus  is  almost  uniform  as  to  the  tendency 
of  the  race  to  increase  when  there  is  abundance  of  food  ami 
wealth. 

Meanwhile,  outside  of  these  speculations,  it  is  impossible 
not  to  regard  these  vast  agglomerations  of  human  beings 
under  single  governments  from  another  point  of  view.     May 


362        SOME   GENERAL   USES    OF   STATISTICAL    KNOWLEDGE. 

they  not  be  changing  entirely  tlie  essential  constitution  of 
governments,  the   character   of  politics,  and   the   range   of 
political  action  ?     Not  only  must  this  CLuestion  be  answered 
in  the  affirmative,  but  the  answer  must  be  of  a  kind,  I  think, 
which  will   surprise  some  of  our   active   politicians.     The 
change  that  is  happening  is  not  merely  that  governments 
are  becoming  democratic,  as  the  phrase  is.     The  governments 
themselves  are  becoming  powers  with  a  limited  range  of 
action  only,  because  the  vast  complexity  and  play  of  interests 
in  modern  societies  place  it  beyond  the  power  of  the  ultimate 
authority  to  interfere  intelligently,  except  within  the  very 
narrowest  limits ;  and  because  the  old  purposes  for  which 
governments  existed — the  maintenance  of  internal  order,  the 
punishment  of  crime,  external  war,  the  regulation  of  suc- 
cessions to  property,  the  teaching  of  religion  perhaps — are 
some   of  them  falling   more   and   more  into   the   hands   of 
voluntary  agencies,  and  are  partly  becoming — through  the 
ease  with  which  they  are  accomplished,  and  for  other  reasons 
— less  important  relatively  than  they  were  to  the  general 
interests  of  the  community.    The  mere  fact,  for  instance,  that 
in  the  United  Kingdom  the  central  government  now  spends 
annually  about   a   twelfth   or  less  of   the  national  income, 
whereas  at  the  beginning  of  the  century  it  spent  about  a 
tliird,  shows  how  much  smaller  a  factor  government  is  in  the 
national  life  than  it  formerly  was.    At  the  same  time  crowds 
of  interests  have  grown  up  for  which  there  are  voluntary 
associations  answering  in  many  respects  the  ends  of  govern- 
ment, but  more  or  less  wholly  dissociated  from  the  central 
government  itself,  and  very  little  regulated   by   it.      The 
public  companies,  the  learned  societies — all  do  things  of  a 
kind  which  governments  were  once  expected  to  do,  but  which 
society  for  the  most  part  now  does  for  itself.     Local  govern- 
ment also  has  become  not  so  much  an  extension  of  national 


SOME   GENERAL    USES   OF   STATLSTICAL   KNOWLEDGE.         303 

government  as  a  species  of  voluntary  association,  adminis- 
tering for  localities  in  certain  matters,  such  as  gas  and  water, 
just  as  other  authorities,  if  I  may  call  them  so,  without 
being  thought  of  as  part  of  the  government  at  all,  administer 
the  fiir  more  important  interests  of  the  railways.  As  a 
consequence,  the  general  interest  of  people  in  the  affairs 
of  government,  and  in  political  action,  is  declining,  because 
private  affairs  and  public  and  semi-public  interests  of  a  non- 
political  kind  are  more  engrossing.  Under  the  changed  cir- 
cumstances politicians  can  hardly  be  at  the  top  of  business 
as  they  once  were ;  they  manage  a  department  of  the  general 
organisation  of  the  community,  and  not  the  organisation  of 
the  M'liole  community  for  all  common  interests  as  was  once 
the  case.  The  chief  interest  now  attaching  to  politics  is  that 
as  politicians  have  power — the  command  of  national  re- 
sources— they  may  cause  great  mischief;  but  the  time  is 
long  past  since  it  has  been  in  their  power  to  do  much  good 
by  what  is  called  constructive  action.  The  community  goes 
its  own  way  in  trade,  in  science,  in  religion,  in  annisement, 
and  hardly  cares  what  politicians  may  do  or  not. 

In  essentials  the  form  of  government  adapts  itself  to  this 
change.  Formally  the  nation  chooses  its  Parliament  and  so 
its  Government.  Practically  the  choice  is  somewhat  like 
the  choice  of  leaders  in  other  public  matters — a  self-choice 
on  the  part  of  a  few  who  devote  themselves  to  the  business 
as  a  business,  and  who  get  to  the  top  just  as  the  directors  of 
a  large  company  get  to  the  top,  the  public  taking  a  languid 
interest  in  the  matter,  and  allowing  itself  to  be  led.  13ut 
the  business  of  getting  elected  and  keeping  foremost  is  itself 
so  arduous,  just  because  of  the  vast  increase  of  population, 
that  any  power  except  for  mischief  when  they  do  govern  is 
necessarily  taken  away  from  those  who  engage  in  the 
struggle.     They  have  not  time  or  strength  to  guvern  if  they 


364        SOME    GENEKAL   USES    OF   STATISTICAL   KNOWLEDGE. 

would.  As  nations  increase  in  numbers,  these  difl&culties 
must  increase,  and  the  sphere  of  government  must  be  pro- 
portionately reduced. 

In  conclusion,  I  ought  perhaps  to  apologise  for  having 
been  tempted  so  much  into  political  speculation  by  the  con- 
sideration of  some  of  the  most  common  facts  of  statistics. 
My  excuse  must  be  the  fascination  of  the  topics,  and  the 
liope  that  some  good  may  be  done  to  our  cause  by  showing 
to  the  public,  and  especially  to  the  younger  generation,  the 
profound  importance  and  interest  of  the  aspects  of  social  and 
economic  progress  which  statistics  present,  and  which  could 
not  be  perceived  at  all  without  statistics.  In  the  course  of 
time,  as  statistical  records  are  maintained,  problems  of  the 
same  kind  as  those  here  discussed  must  be  presented  for 
discussion  with  increasing  clearness,  and  statistical  ideas  of 
society  and  social  progress  must  more  and  more  permeate 
the  literature  and  philosophy  of  the  time.     [1885.] 


(    305     ) 


X. 

THE  PROGEESS  OF  THE  WORKING  CLASSES  IN 
THE  LAST  HALF  CENTURY.* 

Ix  assembling  for  the  labours  of  another  session,  our  first 
duty,  as  it  was  a  year  ago,  is  to  commemorate  the  heavy  loss 
which  the  Society  has  sustained  by  death.  On  the  last 
occasion  the  names  before  us  were  those  of  Mr.  Newmarch 
and  Mr.  Jevons,  identified  for  many  years  with  our  work, 
and  intimately  known  to  many  of  us.  On  the  present 
occasion  the  loss  to  be  recorded  is  of  another  co-worker 
equally  distinguished,  though  in  a  different  way,  and  perhaps 
possessing  a  more  exclusively  statistical  reputation — Dr 
Farr.  The  Journal  of  the  Society  already  contains  a  record 
of  our  sense  of  loss,  but  a  few  words  more  may  surely  be 
permitted  here — in  memory  of  one  who  was  present  year 
after  year,  not  only  at  our  inaugural  meetings,  but  at  almost 
all  the  ordinary  meetings  as  well :  who,  throughout  a  long 
career,  contributed  numerous  and  valuable  papers  to  our 
iliscussions,  the  interval  between  his  first  and  last  paper  read 
at  our  meetings  being  over  thirty  years  ;  who  in  the  fulness 
of  time,  and  certainly  not  before  he  deserved  the  distinction, 
l)resided  over  us  for  the  usual  period  ;  and  M'ho,  in  fact, 
deserves  credit  as  one  of  the  makers  and  promoters  of  this 

*  Inaugural  address  as  President  of  the  Statistical  Society.     De- 
livered 2Uth  November,  1883. 


3G6  THE   PROGRESS   OF   THE   WORKING   CLASSES 

Society,  and  of  the  study  .which  we  cultivate,  in  the  most 
literal  sense  of  the  words.  It  is  a  very  great  loss  we  have 
sustained.  Happily  in  Dr.  Farr's  case  we  have  not  to  lament 
the  premature  shortening  of  days  which  we  had  to  lament 
in  referring  to  the  loss  of  Mr.  Newmarch  and  Mr.  Jevons. 
Dr.  Farr  had  reached  the  limit  of  a  tolerably  long  life,  and 
till  within  a  very  few  years  of  the  close,  had  been  able  to 
take  an  active  part  in  the  studies  to  which  he  was  devoted. 
There  are  at  least  two  remarkable  monuments  of  his  later 
labours,  the  special  report  to  the  Eegistrar-General  on  the 
mortality  of  the  1861-71  decade,  which  was  completed  only 
seven  or  eight  years  ago,  and  his  paper  on  the  mode  of  esti- 
mating the  value  of  stocks  having  a  deferred  dividend,  read 
at  one  of  our  meetings  in  King's  College  in  the  year  1870, 
after  Dr.  Farr  had  served  his  term  as  President  of  the  Society. 
We  can  only  lament  Dr.  Farr's  loss,  therefore,  as  the  common 
lot  of  humanity,  and  though  we  could  have  wished  a  longer 
life  and  gi-eater  service,  we  may  rejoice  that  the  life  was  not 
incomplete,  and  that  Dr.  Farr  had  time  to  perfect  his  best 
work.  What  he  has  left  is  a  noble  monument  of  industry 
and  ingenuity,  full  of  example  to  all  of  us  who  have  devoted 
time  and  strength  to  statistics,  and  he  is  certain  to  be  honoured, 
we  may  be  sure,  by  future  generations  even  more  than  he 
has  been  by  the  present.  To  have  organised,  as  he  did,  the 
official  records  of  vital  statistics  on  a  model  which  has  been 
widely  followed  not  only  here  but  abroad,  and  which  has 
done  much  even  already  to  promote  the  health  and  welfare 
of  mankind,  by  revealing  and  making  e\adent  to  all  some 
main  causes  of  disease  and  mortality,  is  a  great  work 
for  one  man  to  have  done.  Politicians  and  members  of 
Parliament,  who  are  ready  enough  to  use  whatever  figures 
come  to  hand  as  implements  of  political  warfare,  but  who 
seldom  study  them,  may  not  ha\'e  been  able  to  recognise 


IN   TUE    LAST    HALF   CENTURY.  o67 

tlic  work  as  the  j)iiblic  did ;  but  the  work  ivinains,  and  we, 
at  any  rate,  as  members  of  the  Statistical  Society,  are  all 
proud  of  it. 

I  am  sorry  to  have  to  add  that  after  this  address  was  pre- 
pared, the  announcement  appeared  in  the  newspapers  of  the 
deatli  of  Lord  Overstone,  who  was  also  one  of  the  founders  of 
this  Society,  and  one  of  its  most  active  promoters  in  its 
earlier  years,  and  who  was  President  in  the  years  1851-53. 
Lord  Overstone  lias  long  survived  the  limit  of  the  active 
period  of  life,  and  as  we  have  been  reminded  within  the  last 
day  or  two,  the  public  have  very  largely  forgotten  the  services 
which  he  rendered;  but  in  this  Society  there  is  enough 
knowledge  and  enough  interest  in  the  economic  pursuits 
to  which  Lord  Overstone  devoted  himself,  for  many  of 
us  here  really  to  possess  some  acquaintance  with  what  he 
accomplished. 

There  can  be  no  doubt  tliat  in  the  evidence  which  he  gave 
before  several  Committees  of  the  House  of  Commons,  and  in 
the  oi)inions  wliich  he  expressed  privately  to  Cabinet  minister's 
and  public  men  on  economic  and  more  especially  financial 
matters,  upon  which  he  was  frequently  consulted.  Lord 
Overstone  was  able  to  render  eminent  services  to  the  country. 
As  a  preacher  of  the  doctrine  of  "  hard  money  "  he  did  much 
to  settle  the  basis  of  the  national  currency  in  a  difficult  time, 
and  that  in  a  way  which  has  left  no  room  for  change,  and 
which  has  thus  done  not  a  little  to  steady  the  business  of  the 
country.  There  is  no  duuljt  also  that  it  was  in  his  capacity 
as  a  statistician  very  largely  that  he  was  able  to  render 
these  services.  He  was  pre-eminently  one  of  those  men 
who  were  extremely  practical  and  careful  about  the  facts 
upon  which  they  gave  their  opinions.  We  may  thus  claim 
Lord  Overstone  as  one  of  our  distinguished  memliers.  I  may 
add  that  of  the  original  members  of  the  Societv  there  are  now 


368  THE    PROGRESS    OF   THE    WORKING    CL.  SSES 

very  few  survi\'ing.  AVe  have  others  surviving,  as  I  shall 
notice  presently,  who  were  members  almost  from  the  begin- 
ning, but  I  am  speaking  now  literally  of  our  formal  beginning. 
Amongst  those  who  will  be  known  to  you,  I  tliink,  Mr. 
Heywood  and  Mr.  Ed'^in  Chadwick  are  to  be  mentioned  as 
among  the  very  distinguished  members  who  were  at  the 
foundation  of  the  Society,  and  who  still  sur\-ive  to  take  an 
interest  in  our  labours. 

The  mention  of  the  names  of  Lord  Overstone  and  Dr.  Farr 
carries  us  back  naturally  enough  to  the  origin  of  the  Society. 
We  are  carried  back  to  the  same  date  by  an  impending  event 
which  now  casts  its  shadow  before — our  approaching  jubilee, 
which  we  may  hope  will  be  worthily  celebrated.  It  is  of  good 
augury,  I  trust,  that  we  commence  our  fiftieth  session  witli 
the  election  of  no  fewer  than  fifty-eight  new  members.  It 
seems  fairly  probable  now  that  when  we  complete  our  fiftieth 
year  we  shall  have  the  round  number  of  one  thousand 
members — a  wonderful  improvement  upon  the  small  number 
of  fifty  years  ago.  On  such  an  occasion  I  believe  the  subject 
on  which  I  propose  to  address  you  to-night  will  be  not  un- 
suitable— a  re\'iew  of  the  official  statistics  bearing  on  the 
progress  of  the  working  classes — the  masses  of  the  nation — 
in  the  last  half  century.  If  you  go  back  to  the  early  records 
of  the  Society,  you  will  find  that  one  of  the  leading  objects 
of  its  founders  was  to  obtain  means  by  which  to  study  the 
very  question  I  have  selected.  Happily  we  have  still  with 
us,  in  addition  to  those  I  have  named  as  original  members, 
one  or  two  honoured  members  associated  with  the  early 
liistory  of  the  Society — Dr.  Guy  and  Sir  Eawson  Eawson — 
who  will  bear  me  out  in  what  I  have  stated.  I  may  remind 
you,  moreover,  that  one  of  the  founders  of  tlie  Society  was 
;Mr.  Porter,  of  the  Board  of  Trade,  whose  special  study  for 


IN    THE   LAST    HALF    CENTURY.  369 

years  was  much  tlie  same,  as  his  well-known  book,  '  The 
Progress  of  the  Nation,'  bears  witness ;  and  that  in  one  of 
the  earliest  publications  of  the  Society,  a  volume  preceding 
the  regular  issue  of  the  Journal,  he  has  left  a  most  interest- 
ing account  of  what  he  hoped  might  be  effected  by  means 
of  statistics  in  studying  the  subject  I  have  put  before  you, 
or  the  more  general  subject  of  the  "  Progress  of  the  Nation." 
In  asking  you,  therefore,  to  look  for  a  little  at  what  statistics 
tell  us  of  the  progress  of  the  great  masses  of  the  nation,  I  feel 
that  I  am  selecting  a  subject  whicli  is  connected  with  the 
special  history  of  the  Society.  That  it  happens  for  the 
moment  to  be  attracting  a  considerable  amount  of  popular 
attention  in  connection  with  sensational  politics  and  socio- 
logy, with  agitations  for  land  nationalization  and  collectivism 
among  pretended  representatives  of  the  working  classes,  is 
an  additional  reason  for  our  not  neglecting  this  question ; 
but  it  is  a  question  to  whicli  the  Society  has  a  primary 
claim,  and  which  the  authors  of  the  agitations  I  have  re- 
ferred to  would  have  done  well  to  study  from  the  statistical 
point  of  view. 

There  are  two  or  three  ways  in  whicli  statistics  may  throw 
light  on  such  a  question  as  I  have  put  forward.  The  first 
and  most  direct  is  to  see  what  records  there  are  of  the  money 
earnings  of  the  masses  now  and  fifty  years  ago,  ascertain 
whether  they  have  increased  or  diminished,  and  then  com- 
pare them  with  the  rise  or  fall  in  the  prices  of  the  chief 
articles  which  the  masses  consume.  Even  such  records 
would  not  give  a  complete  answer.  It  is  conceivable,  for 
instance,  that  while  earning  more  money,  and  being  able  to 
spend  it  to  more  advantage,  the  working  classes  might  be  no 
better  o(T  than  formerly.  There  may  be  masses,  as  there  arc 
individuals,  who  do  not  know  how  to  spend.     The  question 

II.  2  B 


370  THE   PROGRESS    OF   THE   WORKING   CLASSES 

ofmeans,  however, -will  cany  us  some  distance  on  the  road  to 
our  object.  We  shall  know  that  the  masses  must  be  better 
off,  unless  they  have  deteriorated  in  the  art  of  spending,  a 
subject  of  separate  inquiry. 

In  investigating  such  records,  however,  we  have  to  re- 
cognise that  the  ideal  mode  of  answering  the  question  is  not 
yet  possible.  That  mode  would  be  to  draw  up  an  account  of 
the  aggregate  annual  earnings  of  the  working  classes  for  a 
period  about  fifty  years  ago,  and  a  similar  account  of  the 
aggregate  annual  earnings  of  the  same  classes  at  the  j^resent 
time,  and  then  compare  the  average  per  head  and  per  family 
at  the  different  dates.  Having  thus  ascertained  the  increase 
or  diminution  in  the  amount  per  head  at  the  different  dates, 
it  would  be  comparatively  easy,  though  not  in  itself  quite  so 
easy  a  matter  as  it  seems,  to  ascertain  how  much  less  or  how 
much  more  the  increased  or  diminished  sum  would  buy  of 
the  chief  articles  of  the  workman's  consumption.  But  no 
such  account  that  I  know  of  has  been  drawn  up,  except  for  a 
date  about  fifteen  or  sixteen  years  ago,  when  Mr.  Dudley 
Baxter  and  Professor  Leone  Levi  both  drew  up  statements 
of  enormous  value  as  to  aggregate  earnings,  statements  which 
it  would  now  be  most  desirable  to  compare  with  similar 
statements  for  the  present  time,  if  we  could  have  them,  and 
which  will  be  simply  invaluable  to  future  generations.  In 
the  absence  of  such  statements,  all  tliat  can  be  done  is  to 
compare  what  appear  to  be  the  average  wages  of  large  groups 
of  the  working  classes.  If  it  is  found  that  the  changes  in  the 
money  wages  of  such  groups  are  in  the  same  direction,  or 
almost  all  in  the  same  direction,  then  there  would  be  sufficient 
reason  for  believing  that  similar  changes  had  occurred 
throughout  the  entire  mass.  It  would  be  in  the  highest 
degree  improbable  that  precisely  those  changes  which  could 
not  be  traced  were  in  the  opposite  direction.     The  difficulty 


IN    THE    LAST    HALF   CENTURY.  371 

in  the  way  is  that  in  a  period  of  fifty  years  in  a  country  like 
En<-'land  the  character  of  the  work  itself  chan«,fes.  The 
people  who  have  the  same  names  at  different  times  are  not 
necessarily  doing  the  same  work.  Some  forms  of  work  pass 
wliolly  away  and  wholly  new  forms  come  into  existence. 
Making  all  allowances,  however,  and  selecting  tlie  best 
comparative  cases  possible,  some  useful  conclusion  seems 
olitainable. 

Wliat  I  propose  to  do  first  and  mainly,  as  regards  this 
point,  is  to  make  use  of  an  independent  official  record  which 
we  have  to  thank  Mr.  Porter  for  commencing.  I  mean  the 
record  of  wages,  which  has  been  maintained  for  many  years 
in  the  miscellaneous  statistics  of  the  United  Kingdom,  and 
which  was  previously  commenced  and  carried  on  in  the 
volumes  of  Eevenue  and  Population  Tallies  wliicli  Mr.  Porter 
introduced  at  the  Board  of  Trade  about  fifty  years  ago.  It 
is  curious  on  looking  back  through  these  volumes  to  find  how 
difficult  it  is  to  get  a  continuous  record.  The  wages  in 
one  volume  are  for  certain  districts  and  trades ;  in  a  suljse- 
quent  volume  for  different  districts  and  trades  ;  the  descrip- 
tive classifications  of  the  workers  are  also  constantly  changing. 
Picking  my  way  through  the  figures,  however,  I  have  to 
submit  the  following  particulars  of  changes  in  money  wages, 
between  a  period  forty  to  fifty  years  ago — it  is  not  possible 
to  get  the  same  year  in  all  cases  to  start  from — and  a  period 
about  two  years  ago,  which  may  be  taken  as  the  present 
time.  This  comparison  leaves  out  of  account  the  length  of 
hours  of  work,  which  is  a  material  point  I  shall  notice 
presently. 


13  B  J 


372 


THE    PKOGRESS    OF   THE    WORKING    CLASSES 


COMPAEISON  OF  WAGES   FiFTY   YeAKS   AGO   AND   AT   PRESENT   TiME. 

[From  'Miscellaneous  Statistics  of  the  United  Kingdom,'  and  Porter's 

'  Progress  of  the  Nation.'] 


^      -      . 

Increase  or 

Firt 

ago 
eek 

£|'l 

Decrease. 

Occupation. 

Place. 

Wages 
Yeai's 
per  W 

Wages 
sent  T 
pev  W 

Per 

Amount.     ^^^^_ 

Carpenters 

Manchester  . 

24/- 

Wr 

lo/-    (  +  )    42 

>. 

Glasgow 

14/- 

26/- 

12/-    (  +  )    85 

Bricklayers 

Manchester  * 

24/- 

36/- 

12/-    (  +  )    50 

„ 

Glasgow 

15/- 

27/- 

12/-    (  +  )    80 

Masons    . 

Manchester  * 

24/- 

29/10 

5/lo(  +  )    24 

jj         •         •         • 

Glasgow 

14/- 

23/8 

9/8    (  +  )    69 

Miners     . 

Staffordshire 

2/8t 

4/-t 

1/4    (  +  )    50 

Pattern  weavers 

Huddersfield 

i6/- 

25/- 

9/-    (  +  )    55 

Wool  scourers  . 

}} 

17/- 

22/- 

5/-  (  +  )    30 

Mule  spinners  . 

25/6 

30/- 

4/6   (  +  )    20 

Weavers  . 

12/- 

26/- 

14/-   (  +  )ii5 

Warpers  and  bearaers 

17/- 

27/- 

10/-   (  +  )    58 

Winders  and  reelers. 

61- 

11/- 

5/-   (  +  )   83 

Weavers  (men) 

Bradford 

8/3 

20/6 

12/3   (  +  )i5o 

Peeling  and  warping 

3) 

7/9 

15/6 

7/9    (  +  )ioo 

Spinning  (children)  . 

» 

4/5 

11/6 

7/1    (  +  )i6o 

Thus  in  all  cases  where  I  have  found  it  possible  from  the 
apparent  similarity  of  the  work  to  make  a  comparison  there 
is  an  enormous  apparent  rise  in  money  wages  ranging  from 
20  and  in  most  cases  from  50  to  100  per  cent.,  and  in  one  or 
two  instances  more  than  100  per  cent.]:  This  understates, 
I  believe,  tlie  real  extent  of  the  change.  Thus,  builders' 
wages  are  given  at  the  earlier  date  as  so  much  weekly, 
whereas  in  the  later  returns  a  distinction  is  made  between 
summer  and  winter  wages,  the  hours  of  labour  being 
less  in  winter,  and  as  the  wages  are  so  much  per  hour,  the 
week's  wages  being  also  less,  so  that  it  has  been  possible  to 
strike  a  mean  for  the  later  period,  while  it  does  not  appear 

*  1825.  *  t  Wages  per  day. 

J  The  mean  of  the  percentages  of  increase  is  over  70. 


IN    THE   LAST    HALF    CENTURY. 


373 


that  anytliing  more  is  meant  at  the  early  period  tlian  the 
usual  weekly  wage,  A\hich  wouki  be  tlie  summer  wage. 
Without  uiaking  this  point,  however,  it  is  obvious  tliat  in  all 
cases  there  is  a  very  great  rise. 

Before  passing  from  this  point,  there  is  another  and  con- 
tinuous official  record  1  would  refer  to.  Unfortunately  it 
does  not  go  back  for  much  more  than  tliirty  years.  Still,  as 
far  as  it  goes,  the  evidence  is  in  the  same  direction.  I  refer 
to  the  return  of  merchant  seamen's  wages  annually  issued 
by  the  Board  of  Trade,  in  what  is  known  as  the  I'rogress  of 
Merchant  Shipping  Eeturn.  From  this  Return  may  be 
derived  the  following  comparison  of  seamen's  wages  : — 

COMPAKISON   OF   SeAMEN's   MoNEY   WaGES   PER   MONTH   AT   1850 

AND  THE  Present  Time. 

[From  the  '  Progress  of  Merchant  Shipiiing  Return.'] 


Bristol  . 

1850. 
Sailing. 

Present  Time, 
Steam. 

Increase. 

Amount. 

Per  Cent. 

45/- 

75/- 

30/- 

66 

Glasgow 

45/- 

70/- 

25/- 

55 

LiYerpool  (1) 

50/- 

G7/G 

16/6 

33 

„         (2) 

50/- 

85/- 

35/- 

70 

(3) 

45/- 

60/- 

15/- 

33 

(■i) 

40/- 

50/- 

10/- 

25 

„         (5) 

42/6 

60/- 

17/6 

40 

London  (1)    . 

45/- 

75/- 

30/- 

66 

„       (2)     . 

50/- 

77/6 

27/6 

55 

»       (3)     . 

45/- 

65/- 

20/- 

45 

,.       (4)     .         . 

45/- 

70/- 

25/- 

55 

»         (0)      . 

40/- 

67/6 

27/6 

69 

,.      (0)    .        . 

40/- 

67/6 

27/6 

69 

Here  again,  there,  is  an  enormous  rise  in  money  wages. 
This  return  is  specially  subject  to  the  observation  that  money 
wages  are  only  part  of  the  wages  of  seamen,  but  I  assume 


374  THE   PEOGRESS    OF   THE    WORKING   CLASSES 

it  is  not  open  to  dispute,  that  with  the  improvement  in  our 
shipping  there  has  been  an  improvement  in  the  food  and 
lodging  of  the  sailor,  quite  equal  to  the  improvement  in  his 
money  wage. 

This  question  of  seamen's  wages,  however,  well  illustrates 
the  difficulty  of  the  whole  subject.  Ships  are  not  now 
navigated  by  able  seamen  so  much  as  by  engineers  and 
stokers.  It  would  seem  that  as  a  class  the  new  men  all 
round  are  paid  better  than  the  able  seamen,  but  I  should  not 
press  this  point ;  it  might  well  be  the  case  that  steam  ships 
as  a  whole  could  be  worked  by  an  inferior  class  of  labourers 
as  compared  with  sailing-ships,  and  yet  the  fact  that  inferior 
labour  is  sufficient  for  this  special  trade  would  be  quite 
consistent  with  the  fact  that  the  whole  conditions  of  modern 
labour  require  more  skill  than  the  conditions  fifty  years  ago, 
so  that  there  is  more  labour  relatively  at  the  higher  rates 
than  used  to  be  the  case. 

The  comparison,  except  for  seamen's  wages,  where  it  has  only 
been  possible  to  go  back  for  about  thirty  years,  is  made  between 
a  period  about  fifty  years  ago  and  the  present  time  only. 
It  would  have  complicated  the  figures  too  much  to  introduce 
intermediate  dates.  I  may  state,  however,  that  I  have  not 
been  inattentive  to  this  point,  and  that  if  we  had  commenced 
about  twenty  to  twenty-five  years  ago,  we  should  also  liave 
been  able  to  show  a  very  great  improvement  since  that  time, 
while  at  that  date  also,  as  compared  with  an  earlier  period, 
a  great  improvement  would  have  been  apparent.  A  careful 
and  exhaustive  investigation  of  the  records  of  wages  I  have 
referred  to,  in  comparison  with  the  numbers  employed  in 
different  occupations,  as  shown  by  the  census  reports,  would 
in  fact  repay  the  stvident  who  has  time  to  make  it ;  and  I 
trust  the  investigation  will  yet  be  made. 

The   records   do   not   include   anything   relating   to   the 


IN    Tin:    LAST    HALF   CENTUUY.  0<J 

agricultural  labourer,  but  from  independent  sources — I  would 
refer  especially  to  tlie  Eeports  of  the  recent  Eoyal  Agri- 
cultural Commission — we  may  perceive  how  universal  the 
rise  in  the  wages  of  agricultural  labourers  has  been,  and  how 
universal  at  any  rate  is  the  complaint  that  more  money  is 
paid  for  less  work.  Sir  James  Caird,  in  his  '  Landed 
Interest '  (p.  65),  put  the  rise  at  60  per  cent,  as  compared 
with  the  period  just  before  the  Repeal  of  the  Corn  Laws, 
and  there  is  much  other  evidence  to  the  same  effect.  The 
rise  in  the  remuneration  of  labour  in  Ireland  in  the  last 
forty  years  is  also  one  of  the  facts  which  has  been  con- 
spicuously brought  before  the  public  of  late.  In  no  other 
way  is  it  possible  to  account  for  the  stationariness  of  rents 
in  Ireland  for  a  long  period,  notwithstanding  the  great  rise 
in  the  prices  of  the  cattle  and  dairy  products  which  Ireland 
produces,  and  which,  it  has  been  contended,  would  have 
justified  a  rise  of  rents.  The  farmer  and  the  labourer  together 
have  in  fact  had  all  the  benefit  of  the  rise  in  agricultural 
prices. 

The  next  point  to  which  attention  must  be  drawn  is  the 
shortening  of  the  hours  of  labour  which  has  taken  place. 
"While  the  money  wages  have  increased,  as  we  have  seen,  the 
hours  of  labour  have  diminished.  It  is  difficult  to  estimate 
what  the  extent  of  this  diminution  has  been,  but  collecting 
one  or  two  scattered  notices  I  should  be  inclined  to  say  very 
nearly  20  per  cent.  There  has  been  at  least  this  reduction 
in  the  textile,  engineering,  and  house-building  trades.  The 
workman  gets  from  50  to  100  per  cent,  more  money,  for  20 
per  cent,  less  work ;  in  round  figures,  he  has  gained  from  70 
to  120  per  cent,  in  fifty  years  in  money  return.  It  is  just 
possible  of  course  that  the  workman  may  do  as  much  or 
nearly  as  much  in  the  shorter  period  as  he  did  in  his  longer 
liours.     Still   there   is   the  positive   gain  in  his  being  less 


37(5  THE    PROGRESS    OF    THE    WORKINQ    CLASSES 

time  at  his  task,  which  many  of  the  classes  still  tugging 
lengthily  day  by  day  at  the  oar  would  appreciate.  The 
workman  may  have  been  wise  or  unwise  in  setting  much 
store  by  shorter  hours  in  bettering  himself,  but  the  short- 
ening of  the  hours  of  labour  is  undoubtedly  to  be 
counted  to  the  good  as  well  as  the  larger  money  return 
he  obtains. 

"We  come  then  to  the  question  of  what  the  changes  have 
been  in  the  prices  of  the  chief  articles  of  the  workman's 
consumption.  It  is  important,  to  begin  with,  that,  as  regards 
l^rices  of  commodities  generally,  there  seems  to  be  little 
doubt  things  are  much  the  same  as  they  were  forty  or  fifty 
years  ago.  This  is  the  general  effect  of  the  inquiries  which 
have  been  made  first  as  to  the  depreciation  of  gold  con- 
sequent on  the  Australian  and  Californian  gold  discoveries, 
and  next  as  to  the  appreciation  of  gold  which  has  taken 
place  within  tlie  last  twenty  years,  consequent  on  the  new 
demands  for  gold  which  have  arisen,  and  the  falling  off  in 
the  supply  as  compared  with  the  period  between  1850  and 
1860.  It  would  burden  us  too  much  to  go  into  these  inquiries 
on  an  occasion  like  the  i3resent,  and  therefore  I  only  take 
the  broad  result.  This  is  that  while  there  was  a  moderate 
rise  of  prices  all  round  between  the  years  1847-50,  just 
before  the  new  gold  came  on  the  market,  and  the  year  1862, 
when  Mr.  Jevons  published  his  celebrated  essay,  a  rise  not 
exceeding  about  20  per  cent.,  yet  within  the  last  twenty 
years  this  rise  has  disappeared,  and  prices  are  back  to  the 
level,  or  nearly  to  the  level,  of  1847-50.  The  conclusion  is 
that,  taking  things  in  the  mass,  the  sovereign  goes  as  far  as 
it  did  forty  or  fifty  years  ago,  while  there  are  many  new 
things  in  existence  at  a  low  price  which  could  not  then  have 
Ijcen  bought  at  all.     If,  in  the  interval,  the  average  money 


IN    THE    LAST   HALF   CENTURY. 


377 


earnings  of  the  workin;^  classes  have  risen  between  50  and 
100  per  cent.,  there  must  have  been  an  eiiurnious  change  for 
the  better  in  the  means  of  the  working  man,  unless  by  some 
wonderful  accident  it  has  liappened  that  his  special  articles 
have  changed  in  a  different  way  from  the  general  run  of 
prices. 

But  looking  to  special  articles,  we  find  that  on  balance 
prices  are  lower  and  not  higher.  Take  wheat.  It  is  no- 
torious that  wheat,  the  staff  of  life,  has  been  lower  on  the 
average  of  late  years  than  it  was  before  the  free  trade  era. 
Even  our  fair  trade  friends,  who  find  it  so  difficidt  to  see 
very  plain  things,  were  forced  to  allow,  in  that  wonderful 
manifesto  which  was  published  in  the  '  Times '  some  weeks 
back,  that  wheat  is  about  5s.  a  quarter  cheaper  on  the 
average  than  it  was.  The  facts,  however,  deserve  still  more 
careful  statement  to  enable  us  to  realise  the  state  of  things 
fifty  years  ago  and  at  the  present  time.  The  fair  trade  state- 
ment, if  I  remember  rightly,  showed  an  average  fall  of  5.s\ 
in  the  price  of  wheat,  comparing  the  whole  period  since  the 
Eepeal  of  the  Corn  Laws  with  a  long  period  before.  This 
may  have  been  right  or  wrong  for  the  purpose  in  hand,  but 
for  our  present  purpose,  which  is  to  compare  the  present 
period  with  that  of  half  a  century  ago,  it  is  important  to 
note  that  it  is  mainly  within  the  last  ten  years  the  steadily 
low  price  of  wheat  has  been  established.  Comparing  the 
ten  years  before  1846  with  the  last  ten  years,  wliat  wc  thul 
is  that  while  the  average  price  of  wheat  in  ISoT— It)  was 
oSs.  7d.,  it  was  48.1.  9(^.  only  in  the  last  ten  years — a  reduction 
not  of  OS.  merely,  but  lO^-.  The  truth  is,  the  Eepeal  of  the 
Corn  Laws  was  not  followed  liy  an  immediate  decline  of 
wheat  on  the  average.  The  failure  of  the  potato  croj),  the 
Crimean  "War,  and  tlie  depreciation  of  gold,  all  contributed 
to   maintain  tlie   ])rice,   notwithstanding  free  trade,  down  to 


378  THE    PROGRESS    OF    THE   WORKING    CLASSES 

1862.  Since  then  steadily  lower  prices  have  ruled ;  and 
when  we  compare  the  present  time  with  a  half  century  ago, 
or  any  earlier  part  of  the  century,  these  facts  should  be 
remembered. 

There  is  a  still  more  important  consideration.     Averages 
are  very  good  for  certain  purposes,  but  we  all  know  in  this 
place  that  a  good  deal  sometimes  turns  upon  the  composition 
of  the  average, — upon   whether  it  is  made  up  of  great  ex- 
tremes, or  whether  the  individual  elements  depart  very  little 
from  the  average.     Tliis  is  specially  an  important  matter  in 
a  question  of  the  price  of  food.     The  average  of  a  necessary 
of  life  over  a  long  period  of  years  may  be  moderate,  but  if  in 
some  years  the  actual  price  is  double  what  it  is  in  other 
years,  the  fact  of  the  average  will   in   no   way  save   from 
starvation  at  certain  periods  the  workman  who  may  have  a 
difficulty  in  making  both  ends  meet  in  the  best  of  times. 
WHiat  we  find  then  is  that  fifty  years  ago  the  extremes  were 
disastrous  compared  with  what  they  are  at  the  present  time. 
In  1836  we  find  wheat  touching  36.s.;  in  1838,  1839,  1840, 
and  in  1841,  we  find  it  touching  78s.  M.,  Sis.  6d.,  72s.  lOd., 
and  76s.  Id. ;  in  all  cases  double  the  price  of  the  lowest  year, 
and  nearly  double   the    "  average "  of  the  decade ;  and  in 
1847  the  price  of  102.s.  5d.,  or  three  times  the  price  of  the 
lowest  period,  is  touched.     If  we  go  back  earlier  we  find  still 
more  startling  extremes.     We  have  such  figures  as  106s.  5d. 
in  1810 ;  126s.  6d.  in  1812  ;  109s.  9d.  in  1813,  and  96s.  lid. 
in  1817 ;  these  figures  being  not  merely  the  extremes  touched, 
but  the  actual  averages  for  the  whole  year.     No  doubt  in  the 
early  part  of  the   century  the   over-issue   of  inconvertible 
paper  accounts  for  part  of  the  nominal  prices,  but  it  accounts 
for  a  very  small  part.     What  we  have  to  consider  then  is, 
tliat  fifty  years  ago  the  working  man  with  wages,  on  the 
average,  about  half,  or  not  much  more  than  half  what  they 


IN    THE    LAST    UALF   CENTUKY.  6 1  if 

are  now,  had  at  times  to  contend  with  a  fhictuation  in  the 
price  of  bread  which  implied  sheer  starvation.  Periodic 
starvation  was,  in  fact,  the  condition  of  the  masses  of  working- 
men  througliout  the  kingdom  fifty  years  ago,  and  the  re- 
ferences to  the  subject  in  the  economic  literature  of  the  time 
are  most  instructive.  M.  Quetelet,  in  his  well-known  great 
book,  points  to  the  obvious  connection  between  the  higli 
price  of  bread  following  the  bad  harvest  of  1816,  and  the 
excessive  rate  of  mortality  which  followed.  To  this  day  you 
M'ill  find  tables  in  the  Eegistrar-General's  returns  which 
descend  from  a  time  when  a  distinct  connection  between 
these  high  prices  of  bread  and  excessive  rates  of  mortality 
was  traced.  But  within  the  last  twenty  years  what  do  we 
find  ?  Wheat  has  not  been,  on  the  average,  for  a  whole  year 
so  high  as  70s.,  the  highest  averages  for  any  year  being 
G4.s\  5d.  in  18G7,  and  63s.  M.  in  1868  ;  while  the  highest 
average  of  tlie  last  ten  years  alone  is  58s.  8d.  in  1873 ;  that 
is,  only  about  10s.  above  the  average  of  the  whole  period. 
In  the  twenty  years,  moreover,  the  highest  price  touched  at 
any  period  was  just  over  70s.,  viz.,  70s.  5d.,  in  1867,  and 
74s.  7d.  in  1868 ;  while  in  the  last  ten  years  the  figure  of 
70s.  was  not  even  touched,  the  nearest  approach  to  it  being 
68s.  9rf.  in  1877.  Thus  of  late  years  there  has  been  a  steadily 
low  price,  which  must  have  been  an  immense  boon  to  the 
masses,  and  especially  to  the  poorest.  The  rise  of  money 
wages  has  been  such,  I  believe,  that  working  men  for  the 
most  part  could  have  contended  with  extreme  fluctuations 
in  the  price  of  bread  better  than  they  did  fifty  years  ago. 
But  they  have  not  had  the  fluctuations  to  contend  with. 

It  would  be  useless  to  go  through  other  articles  with  the 
same  detail.  Wheat  had  quite  a  special  importance  fifty 
years  ago,  and  the  fact  that  it  no  longer  has  the  same  im- 
portance— that  we  have  ceased  to  think  of  it  as  people  did 


3S0 


THE   PROGRESS    OF   THE   WORKING    CLASSES 


fifty  years  ago — is  itself  significant.     Still,  taking  one  or  two 
other  articles,  we  find,  on  the  whole,  a  decline : — 

Pbices  of  YABiors  Aeticles  about  Fifty  Yeabs  ago 

AXD   AT   PbESEXT   TiME. 


1839-40. 

Present  Time. 

s.     d. 

s.     d. 

Sugar 

.     per  cwt. 

68     8* 

21    9t 

Cotton  cloth  exi^orted 

.    per  yard 

-     5^. 

-      3i 

(1840.) 

(1882.) 

Inferior  beasts     . 

per  8  lbs. 

3     I 

4    3* 

Second  class 

3     6 

4    91 

Third 

3   II* 

5    Ih 

Inferior  sheep 

3     5 

5    7 

Second  class 

3  loi 

6    li 

Large  hogs. 

4    32 

4    6 

I  should  have  liked  a  longer  list  of  articles,  but  the  difficulty 
of  comparison  is  very  serious.  It  may  be  stated  broadly, 
however,  that  while  sugar  and  such  articles  have  declined 
largely  in  price,  and  while  clothing  is  also  cheaper,  the  only 
article  interesting  the  workman  much  which  has  increased 
in  price  is  meat,  the  increase  here  being  considerable.  The 
"  only  "  it  may  be  supposed  covers  a  great  deal.  The  truth 
is,  however,  that  meat  fifty  years  ago  was  not  an  article  of  the 
workman's  diet  as  it  has  since  become.  He  had  little  more 
concern  with  its  price  than  with  the  price  of  diamonds.  The 
kind  of  meat  which  was  mainly  accessible  to  the  workman 
fifty  years  ago,  ^'iz.,  bacon,  has  not,  it  will  be  seen,  increased 
sensibly  in  price. 

*  Porter's  '  Progress  of  the  Nation,'  p.  543.  In  the  paper  as  read 
to  the  Society^  I  gave  the'  price  without  the  duty,  but  including  the 
duty  the  price  was  what  is  now  given  here.  The  average  price  with 
the  duty  of  the  ten  years  ending  184p_was  oSs.  4.d. 

t  Average  price  of  raw  sugar  imported. 


IN    TIIIC    LAST    HALF    CENTURY.  381 

Only  one  question  remains.  Various  commodities,  it  may 
be  admitted,  have  fallen  in  jn-ice,  l>ut  lunise  rent,  it  is  said, 
has  gone  up.  We  have  heard  a  good  deal  lately  of  the  high 
prices  of  rooms  in  the  slums.  When  we  take  things  in  the 
mass,  however,  we  find  that  however  much  some  workmen  may 
suffer,  house  rent  in  the  aggregate  cannot  have  gone  up  in  a 
way  to  neutralise  to  any  serious  extent  the  great  rise  in  the 
money  wages  of  the  workman.  It  appears  that  in  ISrU 
when  the  house  duty,  which  had  existed  up  to  that  date 
was  abolished,  the  annual  value  of  dwelling  houses  charged 
to  duty  was  £12,003,000,  the  duty  being  levied  on  all  houses 
above  £10  rental  in  Great  Britain.  In  1881-82  the  annual 
value  of  dwelling  houses  charged  to  duty,  the  duty  being 
levied  on  houses  above  £20  only,  was  £39,845,000,  while  the 
value  of  the  houses  between  £10  and  £20  was  £17,040,000, 
making   a   total   of  £56,885,000,  or  between  four  and  five 

O  iff 

times  the  total  of  fifty  years  ago.  Population,  however,  in 
Great  Britain  has  increased  from  about  IG^  millions  in  1831,  to 
nearly  30  millions  in  1881,  or  nearly  100  per  cent.  Allowing 
for  this,  the  increase  in  value  would  Ije  aljout  32  million 
pounds,  on  a  total  of  about  25  million  pounds,  which  may  be 
considered  the  increased  rent  which  householders  above  £10 
have  to  pay — the  increase  being  about  130  per  cent.  As- 
suming that  houses  under  £10  have  increased  in  proportion, 
it  may  be  considered  that  house  rents  are  now  \\  times  more 
th;in  they  were  fifty  years  ago.  In  other  words,  a  workman 
who  paid  £3  a  year  fifty  years  ago,  would  now  pay  £7  lOs. 
Even,  however,  if  rent  were  a  fourth  part  of  the  workman's 
earnings  fifty  years  ago,  he  would  still  be  much  better  off  at 
the  present  time  than  he  was.  His  whole  wages  have  doul^led, 
while  the  prices  of  no  part  of  his  necessary  consum])tion, 
except  rent,  as  we  have  seen,  have  increased — on  the  contrary, 
they  have  rather  diminished.     Say  then  that  the  rent,  which 


382 


THE    PROGRESS    OF   THE    WORKING    CLASSES 


was  a  fourth  part  of  his  expenditure,  has  increased  1^  times, 
while  his  whole  wage  has  doubled,  the  account,  on  a  wage 
of  20s.  fifty  years  ago,  and  40^.  now,  would  stand  : — 


Wage 

Deduct  for  rent 

Balance  for  other  purposes    . 

Fifty  Years  ago. 

Present  Time. 

20       O 

5     o 

s.     d. 
40    0 

12    6 

15     o 

27    6 

— showing  still  an  enormous  improvement  in  the  workman's 
condition. 

It  may  be  pointed  out,  however,  that  houses  are  un- 
doubtedly of  better  value  all  round  than  they  were  fifty  years 
ago.  More  rent  is  paid  because  more  capital  is  in  the  houses, 
and  they  are  better  houses.  It  appears  also  that  fifty  years 
ago  there  were  far  more  exemptions  than  there  are  now, 
rural  dwellings  particularly  being  favoured  as  regards 
exemption.  The  increase  of  rent  for  the  same  accommoda- 
tion, there  is  consequently  reason  to  believe,  has  not  been 
nearly  so  great  as  these  figures  would  appear  to  show.  It 
has  further  to  be  considered  that  the  whole  annual  value  of 
the  dwelling  houses  under  £10  even  now  is  £17,885,000  only, 
the  number  of  houses  being  3,124,000.  This  must  be  a  very 
small  proportion  of  the  aggregate  earnings  of  those  portions 
of  the  working  classes  who  live  in  houses  under  £10  rent, 
and  even  adding  to  it  the  vahie  of  all  the  houses  up  to 
£20,  which  would  bring  up  the  total  to  £34,925,000,  the 
proportion  would  still  be  very  small.  On  the  five  million 
families  at  least  of  the  working  classes  in  Great  Britain, 
the    sum    would    come    to    about    £7    per    family,    which 


IN   THE   LAST    HALF   CENTURY,  383 

is  not  the  main  puitiou  ut  nii  average  working  man's  ex- 
penditure.* 

We  return  then  to  the  conclusion  that  the  increase  of  the 
money  wages  of  the  working  man  in  the  last  fifty  years 
corresponds  to  a  real  gain.  AVliile  his  wages  have  advanced, 
most  articles  he  consumes  have  rather  diminished  in  price, 
the  change  in  wheat  being  especially  remarkable,  and  signifi- 
cant of  a  complete  revolution  in  the  condition  of  the  masses. 
The  increased  price  in  the  case  of  one  or  two  articles — 
particularly  meat  and  house  rent — is  insufficient  to  neutralise 
the  general  advantages  w^hich  the  workman  has  gained. 
Meat  formerly  was  a  very  small  part  of  his  consumption, 
and  allowing  to  house  rent  a  much  larger  share  of  his  ex- 
penditure than  it  actually  bore,  the  increase  in  amount 
would  still  leave  the  workman  out  of  his  increased  wage  a 
larger  margin  than  he  had  before  for  miscellaneous  expendi- 
ture. There  is  reason  to  believe  also  that  the  houses  are 
better,  and  that  the  increased  house-rent  is  merely  the  higher 
price  for  a  superior  article  which  the  workman  can  afibrd. 

It  has  to  be  added  to  all  this  that  while  the  cost  of 
government  has  been  greatly  diminished  to  the  working 
man,  he  gets  more  from  the  government  expenditure 
than  he  formerly  did.  It  would  not  do  to  count  things 
twice  over,  and  as  the  benefit  to  the  working  man  of 
diminished  taxes  has  already  been  allowed  for  in  the  lower 

*  It  may  be  convenient  to  note  here  that  the  figures  as  to  dwelling 
houses  •which  I  have  made  use  of  are  those  relating  to  the  Inhalnted 
House  Duty.  The  figures  as  to  houses  in  the  income  tax  returns 
include  shops  and  factories  as  well  as  dwelling  houses,  and  are  not 
available  in  a  question  of  house-rent.  I  have  also  omitted  the  question 
of  rates.  The  rates  per  pound,  however,  have  not  increased  as  compared 
with  what  they  were  formerly,  and  it  would  make  no  material  difTorence 
if  they  were  to  be  included.  The  workman's  payment  for  rates  and 
rent  together  cannot  have  increased  more  than  is  here  stated  for  rent. 


384  THE   PllOGRESS    OF   THE    -WORKING    CLASSES 

prices  of  wheat  and  sugar,  we  need  say  nothing  more  on  this 
head.  But  few  people  seem  to  be  aware  how,  simultaneously 
with  this  reduction  of  the  cost  of  government,  there  has  been 
an  increase  of  the  expenditure  of  the  government  for  mis- 
cellaneous civil  purposes,  of  all  of  which  the  workman  gets 
the  benefit.  It  may  be  stated  broadly  that  nearly  15  million 
pounds  of  the  expenditure  of  the  central  government  for 
education,  for  the  post  office,  for  inspection  of  factories,  and 
for  the  miscellaneous  purposes  of  civil  government,  is  en- 
tirely new  as  compared  with  fifty  years  ago.  So  far  as  the 
expenditure  is  beneficial,  the  masses  get  something  they  did 
not  get  before  at  all.  It  is  the  same  even  more  markedly 
with  local  government.  In  Great  Britain,  the  annual  outlay 
is  now  about  60  million  pounds,  as  compared  with  20  million 
pounds  fifty  years  ago.  This  20  million  pounds  was  mainly 
for  poor  relief  and  other  old  burdens.  Now  the  poor  relief 
and  other  old  burdens  are  much  the  same,  but  the  total  is 
swollen  by  a  vast  expenditure  for  sanitary,  educational,  and 
similar  purposes,  of  all  of  which  the  masses  of  the  population 
get  the  benefit.  To  a  great  deal  of  this  expenditure  we  may 
attach  the  highest  value.  It  does  not  give  bread  or  clothing 
to  the  working  man,  but  it  all  lielps  to  make  life  sweeter  and 
better,  and  to  open  out  careers  even  to  the  poorest.  The 
value  of  the  free  library,  for  instance,  in  a  large  city,  is 
simply  incalculable.  All  this  outlay  the  workman  has  now 
the  benefit  of  as  he  had  not  fifty  years  ago.  To  repeat  the 
words  I  have  already  used,  he  pays  less  taxes,  and  he  gets 
more — much  more — from  the  Government.* 


*  With  regard  to  tliis  question  of  prices,  I  have  beeu  favoured 
since  the  delivery  of  this  address  with  the  copy  of  a  letter,  dated 
11th  June,  1881,  addressed  by  Mr.  Charles  Hawkins,  of  27  Savile 
Eow,  to  the  editor  of  the  Daily  Nevs  on  the  cost  ^^e/-  patient  of  the 
expenditure  of  St.  George's  Hospital  in  1830  and  1880.    The  facts 


IN    THE    LAST   HALF   CENTURY. 


385 


As  already  anticipated,  however,  tlie  conclusion  thus 
arrived  at  only  carries  us  part  of  the  way.  Assuming  it  to 
have  been  shown  that  the  masses  have  more  money  than 


stated  confirm  in  an  interesting  way  what  is  here  said  as  to  the  cost 
of  articles  of  the  workman's  consumption  fifty  years  ago  and  at  the 
present  time.  Mr.  Hawkins,  who  was  at  one  time  one  of  the  trea- 
surers of  the  hospital,  and  therefore  speaks  with  authority,  gives  the 
following  table  and  notes : — 

"  Although  each  patient  costs  now  Is.  Id.  less  than  in  1830,  there 
have  been  gi-eat  alterations  in  the  different  items  of  expenditure,  viz.:— 


Meat 

Bread  and  flour 

Wine  and  spirits 

]\Ialt  Uquor        .         .         •         • 

Milk 

Tea  and  grocery 

Drugs 

Coals  and  wood  . 

Launch-y 

Instruments  &  surgical  appliances 
Staff;— officers,  servants,  nui'scs  . 


Cost  per  Patient. 


1830. 


s. 

d. 

i8 

4 

lO 

7 

- 

lO 

■5 

5 

6 

o 

3 

ID 

i6 

S 

lO 

6 

2 

lO 

I 

9 

20 

3 

1880. 


s. 

d. 

22 

2 

4 

1 

3 

3 

2 

6 

5 

11 

3 

5 

7 

11 

3 

10 

4 

10 

5 

2 

34 

3 

"Had  wheat  cost  in  1880  what  it  did  in  1830,  £1884  must  have 
been  spent  in  bread  and  flour  instead  of  £738.  The  cost  of  port  wine 
in  1830  was  £72  per  pipe ;  in  1880  £45.  In  1830  many  of  the  patients 
provided  themselves  with  tea  and  sugar.  Under  the  head  '  Drugs ' 
is  included  the  cost  of  leeches  ;  in  1846, 14,800  leeches  were  used,  at 
a  cost  of  £143;  in  1880  only  425,  costing  £l  16s.  In  1833  another 
hospital,  treating  double  the  nimiber  of  patients,  used  48,900  leeches, 
but  in  1880  only  250. 

"  These  items  show  the  gi-eat  advantage  of  the  reductiou  of  price  in 
some  articles  of  diet,  and  the  great  extra  cxpenditm-e  now  necessary 
for  the  treatment  of  hospital  patients,  depending  on  the  greater  call 
for  additional  "staff,"  more  especially  for  nursing,  and  an  altered 
mode  of  treatment  of  accidents  and  operations,  as  also  the  greater 
amouut  of  stimulants  now  exhibited,  &c." 


II. 


2  c 


386  THE   PROGRESS   OF   THE   WORKING   CLASSES 

they  had  fifty  years  ago,  and  that  the  prices  of  the  chief 
articles  they  consume  are  cheaper  rather  than  dearer,  the 
question  remains  whether  the  condition  of  the  masses  has  in 
fact  been  improved.  This  can  only  lie  shown  indirectly  by 
statistics  of  different  kinds,  which  justify  conclusions  as  to 
the  condition  of  the  people  to  whom  they  apply.  To  such 
statistics  I  propose  now  to  draw  your  attention  for  a  moment. 
I  need  hardly  say  that  any  evidence  they  contain  as  to  the 
condition  of  the  people  having  actually  improved  corroborates 
what  has  been  already  said  as  to  their  having  had  the  means 
of  improvement  m  their  hands.  The  evidence  is  cumulative, 
a  point  of  material  importance  in  all  such  inquiries. 

The  first  and  the  most  important  statistics  on  tliis  head  are 
those  relating  to  the  length  of  life  among  the  masses  of  the 
nation.     Do  the  people  live  longer  than  they  did  ?     Here  I 
need  not  detain  you.     A  very  effective  answer  was  supplied 
last  session  by  Mr.  Humphreys,  in  his  able  paper  on  "  The 
Eecent  Decline  in  the  English  Death  Eate."*     Mr.  Hum- 
phreys  there   showed  conclusively  that  the  decline  in  the 
death-rate  in  the  last  five  years,  1876-80,  as  compared  with 
the  rates  on  which  Dr.  Farr's  English  Life  Table  was  based — 
rates  obtained  in  the  years  1838-54 — amounted  to  from  28  to 
32  per  cent,  in  males  at  each  c|uinquennimn  of  the  twenty  years 
5-25,  and  in  females  at  each  quincjuennium  from  5-35  to 
between  21  and  35  per  cent, ;  and  that  the  effect  of  this  decline 
in  the  death-rate  is  to  raise  the  mean  duration  of  life  among 
males  from  39*9  to  41 '9  years,  a  gain  of  2  years  in  the  average 
duration  of  life,  and  among  females  from  41-9  to  45-3  years, 
a  "ain  of  nearly  3^  years  in  the  average  duration  of  life.    Mr. 
Humphreys  also  showed  that  by  far  the  larger  proportion  of 
the  increased  duration  of  human  life  in  England  is  lived  at 


*  See  Statistical  Society's  Journal,  vol.  xlvi.,  p.  195,  &c. 


IN   THE   LAST    HALF    CENTURY.  387 

useful  ages,  and  not  at  the  dependent  ages  of  either  ehildhoud 
or  old  age.  This  little  statement  is  absolutely  conelusive 
on  the  subject ;  Ijut  we  are  apt  to  overlook  how  much  the 
figures  mean.  No  such  change  could  take  place  without  a 
great  increase  in  the  vitality  of  the  people.  Not  only  have 
fewer  died,  but  the  masses  who  have  '^lived  must  have  been 
healthier,  and  have  suffered  less  from  sickness  than  they  did. 
Though  no  statistics  are  available  on  this  point,  we  must 
assume  that  like  causes  produce  like  effects ;  and  if  the 
weaker,  who  would  otherwise  have  died,  have  been  able  to 
survive,  the  strong  must  also  have  been  better  than  they 
would  otherwise  have  been.  Erom  the  nature  of  the  figures, 
also,  the  improvement  must  have  been  among  the  masses, 
and  not  among  a  select  class  whose  figures  throw  up  the 
average.  The  figures  to  be  affected  relate  to  such  large 
masses  of  population,  that  so  great  a  change  in  the  average 
could  not  have  occurred  if  only  a  small  percentage  of  the 
population  had  improved  in  health. 

I  should  like  also  to  point  out  that  the  improvement  in 
health  actually  recorded  obviously  relates  to  a  transition 
stage.  Many  of  the  improvements  in  the  condition  of  the 
working  classes  have  only  taken  place  quite  recently.  They 
have  not,  therefore,  affected  all  through  their  existence  any 
but  the  youngest  lives.  When  the  improvements  have  been 
in  existence  for  a  longer  j)eriod,  so  that  the  lives  of  all 
who  are  living  must  have  been  affected  from  birth  ]»y  the 
changed  conditions,  we  may  infer  that  even  a  greater 
gain  in  the  mean  duration  of  life  will  be  shown.  As  it  is, 
the  gain  is  enormous.  Wliether  it  is  due  to  better  and  more 
abundant  food  and  clotliing,  to  better  sanitation,  to  better 
knowledge  of  medicine,  or  to  these  and  other  causes  combined, 
the  improvement  has  beyond  all  question  taken  place. 

The  next  figures  I  shall  refer  to  are  those  well-known  ones 

2  c  2 


388 


THE   PROGRESS    OF    THE    ^YOIlKING    CLASSES 


relating  to  the  consumption  of  the  articles  which  the  masses 
consume.  I  copy  merely  the  figures  in  the  Statistical  Abstract 
for  the  years  1840  and  1881  :— 

QUAXTITIES   OF   THE   PRINCIPAL   IMPORTED   AKD   EXCISABLE   ARTICLES 
RETAINED   FOR   HOME    CONSUMPTION,   PER    HeAD    OF    THE    TOTAL 

Population  of  the  United  Kingdom. 


Bacon  and  hams 

lbs. 

18-iO. 

1881. 

O'OI 

13-93 

Butter 

3> 

I-05 

6-36 

Cheese 

JJ 

0'92 

5-77 

Currants  and  raisins    . 

I  "45 

4-34 

Eggs  .... 

No. 

3-63 

21-65 

Potatoes 

lbs. 

O'OI 

12-85 

Rice  .... 

>> 

o"9o 

16-32 

Cocoa 

o-o8 

0-31 

Coffee 

jy 

i-o8 

0-89 

Com,  wheat,  and  wheat  flou] 

^          ^y 

42-47 

216-92 

Eaw  sugar  . 

sy 

15-20 

58-92 

Refined  sugar 

yy 

nil 

8-44 

Tea    . 

yy 

1*22 

4-58 

Tobacco 

jj 

0-86 

1-41 

Wine 

galls. 

0-25 

0-45 

Spirits 

jj 

0-97 

1-08 

Malt  .... 

bshls. 

1-59 

1-91* 

This  wonderful  table  may  speak  for  itself.  It  is  an  obvious 
criticism  that  many  of  the  articles  are  also  articles  of  home 
production  so  that  the  increase  does  not  show  the  real  in- 
crease of  the  consumption  of  the  whole  population  per  head. 
Assuming  a  stationary  production  at  home,  the  increased 
consumption  per  head  cannot  be  so  much  as  is  here  stated 
for  the  imported  article  only.  There  are  other  articles, 
however,  such  as  rice,  tea,  sugar,  coffee,  tobacco,  spirits,  wine 
and  malt,  which  are  either  wholly  imported,  or  where  we 
have  the  excisable  figures  as  well,  and  they  all — with  the 
one  exception  of  coffee — tell  a  clear  tale.     The  increase  in 


*  Year  1878. 


IN   THE   LAST   HALF   CENTURY.  389 

tea  and  sugar  appears  especially  significant,  the  consumption 
per  head  now  being  lour  times  in  round  figures  what  it  was 
forty  years  ago.  There  could  be  no  better  evidence  of 
diffused  material  well-being  among  the  masses.  Tlie  articles 
are  not  such  that  the  increased  consumption  by  the  rich, 
could  have  made  much  difference.  It  is  the  consumption 
emphatically  of  the  mass  which  is  here  in  question. 

As  regards  the  articles  imported,  which  are  also  articles  of 
home  production,  it  has,  moreover,  to  be  noted  that  in  several 
of  them,  bacon  and  hams,  cheese  and  butter,  the  increase  is 
practically  from  nothing  to  a  very  respectable  figure.  The 
import  of  bacon  and  hams  alone  is  itself  nearly  equal  to  the 
estimated  consumption  among  the  working  classes  50  years 
ago,  who  consumed  no  other  meat. 

The  only  other  figures  I  shall  mention  are  those  relating  to 
education,  pauperism,  crime,  and  savings  banks.  But  I  need 
not  detain  you  ,here.  The  figures  are  so  well  known  that  I 
must  almost  apologise  for  repeating  them.  I  only  insert 
them  to  round  off  the  statement. 

As  to  education,  we  have  practically  only  figures  going 
back  thirty  years.  In  1851,  [in  England,  the  children  in 
average  attendance  at  schools  aided  by  parliamentary  grants 
numbered  239,000,  and  in  Scotland  32,000;  in  1881  the 
figures  were  2,863,000  and  410,000.  If  anything  is  to  be 
allowed  at  all  in  favour  of  parliamentary  grants  as  raising  the 
character  of  education,  such  a  change  of  numbers  is  most 
significant.  The  children  of  the  masses  are,  in  fact,  now 
obtaining  a  good  education  all  round,  while  fifty  years  ago 
the  masses  had  either  no  education  at  all  or  a  comparatively 
poor  one.  Dropping  statistics  for  the  moment,  I  should  like 
to  give  my  own  testimony  to  an  observed  fact  of  social  life — 
that  there  is  nothing  so  striking  or  so  satisfactory  to  those 
who  can  carry  their  memories  back  nearly  forty  years,  as  to 


390  THE    rnOGKESS    OF    THE    WORKING    CLASSES 

observe  the  superiority  of  tlie  education  of  the  masses  at  the 
present  time  to  what  it  was  then.  I  suppose  the  most 
advanced  common  education  forty  or  fifty  years  ago  was  i^ 
Scotland,  hut  the  superiority  of  the  common  school  system 
there  at  the  present  day  to  what  it  was  forty  years  ago  is 
immense.  If  Scotland  has  gained  so  much,  what  must  it 
have  been  in  England  where  there  was  no  national  system 
fifty  years  ago  at  all  ?  Thus  at  the  present  day  not  only  do 
we  get  all  cliildren  into  schools,  or  nearly  all,  but  the  edu- 
cation for  the  increased  numbers  is  better  than  that  which 
the  fortunate  few  alone  obtained  Ijcfore. 

Next  as  to  crime,  the  facts  to  note  are  that  rather  more 
than  forty  years  ago,  with  a  population  little  more  than  half 
what  it  is  now,  the  number  of  criminal  offenders  committed 
for  trial  (1839)  was  54,000  :  in  England  alone  24,000.  Now 
the  corresponding  figures  are,  United  Kingdom  22,000,  and 
England  15,000  ;  fewer  criminals  by  a  great  deal  in  a  much 
larger  population.  Of  course  the  figures  are  open  to  the 
observation  that  changes  in  legislation  providing  for  the 
summary  trial  of  offences  that  formerly  went  to  the  assizes 
may  have  had  some  effect.  But  the  figures  show  so  great  and 
gradual  a  change,  that  there  is  ample  margin  for  the  results 
of  legislative  changes,  without  altering  the  inference  that  there 
is  less  serious  crime  now  in  the  population  than  there  was 
fifty  years  ago.  Thus  an  improvement  as  regards  crime  corre- 
sponds to  the  better  education  and  well-being  of  the  masses. 

Next  as  regards  pauperism  ;  here  again  the  figures  are  so 
imperfect  that  we  cannot  go  back  quite  fifty  years.  It  is 
matter  of  history,  however,  that  pauperism  was  nearly  break- 
ing down  the  country  half-a-century  ago.  The  expenditure  on 
poor  relief  early  in  the  century  and  down  to  1830-31  was 
nearly  as  great  at  times  as  it  is  now.  With  half  the  popu- 
lation in  the  country  that  there  now  is,  the  burden  of  the 


IN    THE    LAST    HALF    CENTURY. 


391 


poor  was  the  same.  Since  184'J,  liowevcr,  we  have  con- 
tinuous figures,  and  from  these  we  know  that,  with  a  con- 
■stantly  increasing  population,  there  is  an  absolute  decline  in 
the  amount  of  pauperism.  The  earliest  and  latest  figures  are : — 

Paupeus  in  Receipt  of  Relief  iff  the  undkumentioned  Yeaks 
'AT  GIVEN  Dates. 


England     . 

SQotlaud 

Ireland 

United  Kingdom    . 

18^9. 

issi. 

934,000 

122,000* 

620,000 

803,000 
102,000 
109,000 

1,676,000 

1,014,000 

Thus  in  each  of  the  three  divisions  of  the  United  Kingdom 
there  is  a  material  decline,  and  most  of  all  in  Ireland,  the 
magnitude  of  the  decline  there  being  no  doubt  due  to  the  fact 
that  the  figures  are  for  a  period  just  after  the  great  famine. 
But  how  remote  we  seem  to  be  from  those  days  of  famine  ! 

Last  of  all  we  come  to  the  figures  of  savings  "banks.  A  fifty 
years'  comparison  gives  the  following  results  for  the  whole 
kinfrdom : 


Number  of  depositors 
Amount  of  dei)osits  . 
„         per  depositor 

1831. 

1881. 

429,000 

£13,719,000 

£32 

4,140,000 

£80,334,000 

£10 

An  increase  of  ten-fold  in  the  number  of  depositors,  and  of 
five-fold  and  more  in  the  amounts  of  deposits !  It  seems 
obvious  from  these  figures  that  the  lial)it  and  means  of 
saving  have   become  widely  diffused   in   these  fifty  years. 


1859. 


392 


THE   PROGRESS   OF   THE   WORKING   CLASSES 


The  change  is  of  course  in  part  due  to  a  mere  change  in  the 
facilities  offered  for  obtaining  deposits ;  but  allowing  ample 
margin  for  the  effect  of  increased  facilities,  we  have  still 
before  us  evidence  of  more  saving  among  the  masses. 

There  is  yet  one  other  set  of  statistics  I  should  like  to 
notice  in  this  connection,  those  relating  to  the  progress  of 
industrial  and  provident  co-operative  societies  in  England 
and  Wales.  These  I  abstract  from  the  special  appendix  to 
the  '  Co-operative  Wholesale  Society's  Annual  Almanac  and 
Diary'  for  the  present  year  (pp.  81  and  82).  Unfortunately 
the  figures  only  go  back  to  1862,  but  the  growth  up  to  1862 
appears  to  have  been  very  small.  Now,  however,  most 
material  advance  is  shown  : — 


Number  of  members 

Capital— 

Share 

Loan  .... 
Sales  .... 
Net  profit 

1862. 

1881. 

90,000 

£ 

428,000 

55,000 

2,333,000 

165,000 

525,000 

£ 

5,881,000 

1,267,000 

20,901,000 

1,617,000 

Such  figures  arc  still  small  compared  with  what  we  should 
like  to  see  them,  but  they  at  least  indicate  progress  among 
the  working  classes,  and  not  retrogression  or  standing  still. 

To  conclude  this  part  of  the  evidence,  we  find  undoubtedly 
that  in  longer  life,  in  increased  consumption  of  the  chief 
commodities  they  use,  in  better  education,  in  greater  freedom 
from  crime  and  pauperism,  and  in  increased  savings,  the 
masses  of  the  people  are  better,  immensely  better,  than  they 
were  fifty  years  ago.  This  is  quite  consistent  with  the  fact, 
which  we  all  lament,  that  there  is  a  residuum,  still  un- 
improved, but  apparently  a  smaller  residuum  both  in  pro- 


IN    THE   LAST    HALF    CENTUKV. 


•:m 


portion  to  the  population  and  absolutely,  than  was  the 
case  fifty  years  ago  ;  and  witli  the  fact  that  the  improvement, 
measured  even  by  a  low  ideal,  is  far  too  small.  No  one  can 
contemplate  the  condition  of  the  masses  of  the  people 
without  desiring  something  like  a  revolution  for  the  better. 
Still,  the  fact  of  progress  in  the  last  fifty  years— progress 
which  is  really  enormous  when  a  comparison  is  made  with 
the  former  state  of  things— must  be  recognised.  Dis- 
content with  the  present  must  not  make  us  forget  that  things 
have  been  so  much  worse. 

But  the  question  is  raised:  Have  the  working  classes 
gained  in  proportion  with  others  by  the  development  of 
material  wealth  during  the  last  fifty  years  ?  The  question 
is  not  one  which  would  naturally  excite  much  interest  among 
those  who  would  answer  the  primary  (question  as  to  whether 
the  working  classes  have  gained  or  not,  as  I  have  done,  in 
the  affirmative.  Where  all  are  getting  on,  it  does  not  seem 
very  practical  in  those  who  are  getting  on  slowly  to  grudge 
the  quicker  advance  of  others.  Usually  those  who  put  the 
question  have  some  vague  idea  that  the  "capitalist  classes,  as 
they  are  called,  secure  for  themselves  all  the  benefits  of  the 
modern  advance  in  wealth ;  the  rich,  it  is  said,  are  becoming 
richer,  and  the  poor  are  becoming  poorer.  It  will  be  -con- 
venient then  to  examine  the  additional  question  specifically. 
If  the  answer  agrees  with  what  has  already  been  advanced, 
then,  as  nobody  doubts  that  material  wealth  has  increased,  all 
will  be  forced  to  admit  that  the  working  classes  have  had  a 
fair  share. 

At  first  sight  it  would  appear  that  the  enormous  figures 
of  the  increase  of  capital,  which  belong,  it  is  assumed,  to  the 
capitalist  classes,  are  inconsistent  with  the  notion  of  the 
non-capitalist  classes  having  had  a  fair  share.     In  the  paper 


594  THE    TROGRESS    OF   THE    WORKING   CLASSES 

Avliicli  I  read  to  the  Society  four  years  ago,  on  "The  Eecent 
Accumulations  of  Capital  in  the  United  Kingdom,"  the 
conclusion  at  which  I  arrived  was  that  in  the  ten  years, 
1865-75,  there  had  been  an  increase  of  40  per  cent,  in  the 
capital  of  the  nation,  and  27  per  cent,  in  the  amount  of 
capital  per  head,  that  is,  allowing  for  the  increase  of  popula- 
tion. Going  back  to  1843,  which  is  as  far  as  we  can  go  back 
with  the  income  tax  returns,  we  also  find  that  since  then  the 
gross  assessment,  allowing  for  the  income  from  Ireland  not 
then  included  in  the  returns,  has  increased  from  280  million 
pounds  to  577  million  pounds,  or  more  than  100  per  cent, 
in  less  than  fifty  years.  Assuming  capital  to  have  increased 
in  proportion,  it  is  not  to  be  wondered  at  that  the  impression 
of  a  group  of  peoj^le  called  the  capitalist  classes  getting 
richer  and  richer  while  the  mass  remain  poor  or  become 
poorer,  should  be  entertained.  Allowing  for  the  increase  of 
I)opulation,  the  growth  of  capital  and  income-tax  income  are 
really  much  smaller  than  the  growth  of  the  money  income  of 
the  working  classes,  which  we  have  found  to  be  something 
like  50  to  100  per  cent,  and  more  per  head  in  fifty  years, 
Ijut  the  impression  to  the  contrary  undoubtedly  exists,  and  is 
very  natural. 

The  error  is  partly  in  supposing  that  the  capitalist  classes 
remain  the  same  in  number.  This  is  not  the  case;  and  I 
ha\'e  two  pieces  of  statistics  to  refer  to  which  seem  to  show 
that  the  capitalist  classes  are  far  from  stationary,  and  that 
they  receive  recruits  from  period  to  period — in  otlier  words, 
that  wealtli,  in  certain  directions,  is  becoming  more  diffused, 
.although  it  may  not  be  diffusing  itself  as  we  should  wish. 

The  first  evidence  I  refer  to  is  that  of  the  Probate  Duty 
returns.  Througli  the  kindness  of  the  Commissioners  of 
Inland  Pievenue,  I  am  able  to  ])ut  before  you  a  statement  of 
-the  number  of  pruluites  granted  in  1881,  and  of  the  amounts 


IN   THE   LAST    UALF   CENTURY. 


305 


of  property  "  proved,"  with  wliich  we  may  compare  similar 
figures  publislied  by  Mr.  I'orter  in  liis  '  Progress  of  the 
Nation '  for  1838.  I  am  sorry  to  say  Mr.  Porter's  figures 
for  1838  are  far  more  detailed  than  those  I  am  able  to  give ; 
a  more  minute  comparison  would  be  most  instructive ;  but  I 
was  unfortunately  too  late  in  applying  to  the  Commissioners 
of  Inland  Ee venue  for  the  details,  which  I  found  they  were 
most  willing  to  give.  However,  the  statement  they  supplied 
to  me,  and  the  comparison  which  can  thus  be  made,  seem 
most  instructive.     They  are  as  follows : — 

•Statement  of  Number  oe  Pkobates  granted  in  1882,  with 
Amounts  of  Property  Proved,  and  Average  per  Probate 
[from  figures  supplied  by  the  Commissioners  of  Inland  Pevenue]  ; 
and  Comparison  with  a  similar  Statement  for  1838.  [From 
Porter's  '  Progress  of  the  Nation,'  p.  600,  ct  sey.] 


England 
Scotland     . 
Ireland 

United  Kingdom 

Number  of 
Probates. 

Amount  of  Property. 

Amount  of 

Property  per 

Estate. 

1882. 

1838. 

1882. 

1838. 

1882. 

1838. 

45,555 
5,221 

4,583 

21,900 
1,272 
2,196 

£ 

118,120,961 

13,695,314 

8,544,579 

£ 

47,60~4,755 
2,817,260 
4,465,240 

£ 
2,600 
2,600 
1,900 

2,1~70 
2,200 
2,000 

55,359 

25,368 

140,360,854 

54,887,255J2,5oo 

2,160 

Thus,  in  spite  of  the  enormous  increase  of  property  passing 
at  death,  amounting  to  over  150  per  cent.,  which  is  more 
than  the  increase  in  the  income-tax  income,  the  amount  of 
property  per  estate  has  not  sensibly  increased.  Tlie  increase 
of  the  number  of  estates  is  more  than  double,  and  gi-eater 
therefore  than  the  increase  of  population,  but  the  increase  of 
capital  per  head  of  the  capitalist  classes  in  England  only 
19  per  cent.,  and  in  the  United  Kingdom  only  15  per  cent. 


396  THE   PROGRESS   OF   THE   WORKING   CLASSES 

Curiously  enough,  I  may  state,  it  is  hardly  correct  to  speak  of 
the  capitalist  classes  as  holding  this  property,  as  the  figures 
include  a  small  percentage  of  insolvent  estates  ;  but  allowing 
all  the  property  to  belong  to  the  capitalist  classes,  still  we 
have  the  fact  that  those  classes  are  themselves  increasing. 
They  may  be  only  a  minority  of  the  nation,  though  I  think 
a  considerable  minority,  as  55,000  estates  passing  in  a  year 
represent  from  1,500,000  to  2,000,000  persons  as  possessing 
property  subject  to  probate  duty ;  and  these  figures,  it  must 
be  remembered,  do  not  include  real  property  at  all.  Still, 
small  or  large  as  the  minority  may  be,  the  fact  we  have 
before  us  is  that  in  the  last  fifty  years  it  has  been  an  in- 
creasing minority,  and  a  minority  increasing  at  a  greater  rate 
than  the  increase  of  general  population.  Wealth,  to  a  certain 
extent,  is  more  diffused  than  it  was. 

If  I  had  been  able  to  obtain  more  details,  it  would  have 
been  possible  to  specify  the  different  sizes  of  estates  and  the 
different  percentages  of  increase,  from  which  it  would  not 
only  have  appeared  whether  the  owners  of  personal  property 
were  increasing  in  number,  but  whether  the  very  rich  were 
adding  to  their  wealth  more  than  the  moderately  rich,  or 
vice  versa.  But  it  is  something  to  know  at  -leasb  that  there 
are  [more  owners.  I  trust  the  Commissioners  of  Inland 
Eevenue  will  see  their  way  in  their  next  report  to  give  more 
details  on  this  very  interesting  point.* 

Before  passing  on  I  should  like  to  add  a  caution  which 
may  not  be  necessary  in  this  room,  but  which  may  be  needed 
outside.     All  such  figures  must  be  taken  with  a  good  deal  of 

*  It  appears  that  the  increase  in  the  number  of  probates  for  less 
than  £1000  is  from  18,490  to  41,278,  or  about  120  per  cent.,  the 
average  value  per  probate  being  much  the  same ;  while  the  increase 
of  the  number  of  probates  for  more  than  £1000  is  from  C878  to 
12,G29,  or  over  80  per  cent.,  and  the  average  value  per  probate  has 
increased  from  £7150  to  £9200. 


IN   THE   LAST   HALF   CENTURY.  397 

qualification,  owing  to  variations  of  detiiil  in  the  nictlioil  of 
levying  the  duty  at  different  times,  variations  in  the  character 
of  the   administration,  and   the  like  causes.     I  notice,  for 
instance,    an   unusually   remarkable   increase    both   in   the 
number   of    owners   and    amount   of    property    passing   in 
Scotland ;    this  last   fact,  Ij  believe,  having   already   given 
rise   to  the   statement   that   there  has  been  something  un- 
exampled in  the  increase  of  personal  property  in  Scotland, 
The   explanation   appears  to  be,  however,  that  the  increase 
of  property  in  Scotland  is,  to  some  extent,  only  apparent, 
being  due  partly,  for  instance,  to  the  fact  that  by  Scotch  law 
mortgages  are  real  property,  whereas   in  England  they  are 
personal  property,  so  that  it  was  necessary,  in  the  course  of 
administering  the  tax,  to  pass  a  special  law  enabling   the 
Commissioners  of  Inland  Eevenue  to  bring  Scotch  mortgages 
into  the  category  of  personal  property.*     This  is  only  one 
illustration  of  the  caution  with  which  such  figures  must  be 
used.     Taking   them   in   the  lump,  and  not  pressing  com- 
parisons between  the  three  divisions  of  the  United  Kingdom, 
or  any  other  points  of  detail  which  might  be  dangerous,  we 
appear  to  be  safe  in  the  main  conclusion  that  the  number  of 
owners  of  personal  property  liable  to  probate  duty  has  in- 
creased in  the  last  fifty  years  more  than  the  increase  of  popu- 
lation, and  that  on  the  average  these  owners  are  only  about 
15  per  cent,  richer  than^they  were,  wdiile  the  individual  income 
of  the  working  classes  has  increased  from  50  to  100  per  cent. 
The  next  piece  of  statistics  I  have  to  refer  to  is  the  number 
of  separate  assessments  in  that  part  of  Schedule  D.  known  as 
Part  L,  viz.,  Trades  and  Professions,  which  excludes  public 
companies  and  their  sources  of  income,  where  there  is  no 

*  See  '  Special  Report  of  Commissioners  of  Inland  Revenue,'  1870, 
vol.  i.,  p.  99.  The  law  on  this  and  other  points  was  altered  by 
23  &  24  Vict.  cap.  80. 


398 


THE  PROGRESS   OF  THE  WORKING   CLASSES 


reason  to  believe  that  the  number  of  separate  assessments 
corresponds  in  any  way  to  the  number  of  individual  incomes. 
Even  in  Part  I.  there  can  be  no  exact  correspondence,  as 
partnerships  make  only  one  return ;  but  in  comparing  distant 
periods,  it  seems  not  unfair  to  assume  that  the  increase  or 
decrease  of  assessments  would  correspond  to  the  increase  or 
decrease  of  individual  incomes.  This  must  be  the  case  unless 
we  assume  that  in  the  interval  material  differences  were 
likely  to  arise  from  the  changes  in  the  number  of  partnerships 
to  which  individuals  belonged,  or  from  partnerships  as  a  rule 
comprising  a  greater  or  less  number  of  individuals.  Using 
the  figures  with  all  these  qualifications,  we  get  the  following 
comparison : — 

Number  of  Persons  at  different  Amounts  op  Income  charged 
UNDER  Schedule  D.  in  1843  and  1879-80  compared  [in 
England].* 


£          £ 

1843. 

1879-80. 

150  and  under  200 

39,366 

130,101 

200    „    300 

28,370 

88,445 

300    „    400 

13,429 

39  >  8*96 

400    „    500 

6,781 

16,501 

500    „    600 

4,780 

11,317 

600    „    700 

2,672 

6,894 

700    „    800 

1,874 

4,054 

800    „    900 

1,^2 

3,595 

900    „   1,000 

894 

1,396 

I, GOO      „    2,000 

4,228 

10,352 

2,000      „    3,000 

1,235 

3,131 

3,000      „   4,000 

526 

1,430 

4,000      „    5,000 

339 

758 

5,000      „   10,000 

493 

1,439 

10,000      „   50,000 

200 

785 

50,000  and  upwards 
Total  . 

8 

68 

106,637 

320,162 

*  The  figures  for  1843  cannot  be  given  for  cither  Scotland  or 
Ireland. 


IN    THE    LAST    HALF   CENTUUV.  399' 

Here  the  increase  in  all  classes,  from  the  lowest  to  the 
highest,  is  between  two  and  three  times,  or  rather  more  than 
three  times,  with  the  exception  of  the  highest  class  of  all, 
where  the  numbers,  however,  are  quite  inconsiderable. 
Again  a  proof,  I  think,  of  the  greater  diffusion  of  wealth  so 
far  as  the  assessment  of  income  to  income  tax,  under 
Schedule  1).  may  be  taken  as  a  sign  of  the  person  assessed 
having  wealth  of  some  kind,  which  I  fear  is  not  always  the 
case.  If  the  owners  of  this  income,  at  least  of  the  smaller 
incomes,  are  to  be  considered  as  not  among  the  capitalists, 
but  among  the  working  classes — a  very  arguable  proposition 
— then  the  increase  of  the  number  of  incomes  from  £150  up 
to  say  £1000  a-year,  is  a  sign  of  the  increased  earnings  of 
working  classes,  which  are  not  usually  thought  of  by  that 
name.  The  increase  in  this  instance  is  out  of  all  pro])ortiou 
to  the  increase  of  population. 

In  giving  these  figures  I  have  omitted  the  incomes  under 
£150.  There  is  quite  a  want  of  satisfactory  data  for  any 
comparison,  I  think,  except  as  regards  incomes  actually 
subject  to  assessment,  and  the  data  at  the  beginning  of  the 
period  are  specially  incomplete. 

Wliichever  way  we  look  at  the  figures,  therefore,  we  have 
this  result,  that  while  the  increase  of  personal  property  per 
head  of  the  capitalist  class,  according  to  the  probate  returns, 
is  comparatively  small,  being  only  about  15  per  cent.,  yet 
there  is  an  increase  of  the  number  of  people  receiving  good 
incomes  from  trades  and  professions  out  of  all  proportion  to 
the  increase  of  population.  We  cannot  but  infer  from  this 
that  the  number  of  the  moderately  rich  is  increasing,  and 
that  there  is  little  foundation  for  the  assertion  that  the 
rich  are  becoming  richer.  All  the  facts  agree.  The  working 
classes  have  had  large  additions  to  their  means ;  capital  has 
increased  in  about  equal  ratio ;  but  the  increase  of  capital 


400  THE   PROGRESS    OF    THE    WORKING    CLASSES 

per  head  of  the  capitalist  classes  is  by  no  means  so  great  as 
the  increase  of  working-class  incomes. 

I  should  wish  further  to  point  out,  however,  that  it  is  a 
mistake  to  speak  of  the  income  in  the  various  schedules  to 
the  income  tax  as  the  income  of  a  few,  or  exclusively  of 
classes  wliich  can  be  called  capitalist  or  rich.  A  suspicion 
of  this  has  already  been  raised  by  the  facts  as  to  trades  and 
professions.  Let  me  just  mention  this  one  little  fact  in  addition. 
Out  of  £190,000,000  assessed  under  Schedule  A.  in  1881-82, 
the  sum  of  £11,359,000  was  exempted  from  duty  as  being 
the  income  of  people  whose  whole  income  from  all  sources 
was  under  £150  a-year.  If  we  could  get  at  the  fact  as  to 
how  the  shares  of  public  companies  are  held,  and  as  to  the 
immense  variety  of  interests  in  lands  and  houses,  we  should 
have  ample  confirmation  of  what  has  already  appeared  from 
the  probate  duty  figures,  that  there  is  a  huge  minority 
interested  in  property  in  the  United  Kingdom,  great  numbers 
of  whom  would  not  be  spoken  of  as  the  capitalist  classes. 

To  test  the  question  as  to  whether  there  has  been  any 
disproportionate  increase  of  capital,  and  of  the  income  from 
it,  in  yet  another  way,  I  have  endeavoured  to  make  an 
analysis  of  the  income  tax  returns  themselves,  distinguishing 
in  them  what  appears  to  be  the  income  of  idle  capital  from 
income  which  is  derived  not  so  much  from  the  capital  itself 
as  from  the  labour  bestowed  in  using  the  capital.  Only  the 
roughest  estimate  can  be  made,  and  the  data,  when  we  go 
back  to  1843,  are  even  more  incomplete  than  they  are  now  ; 
but  I  have  endeavoured  as  far  as  possible  to  give  everything 
to  capital  that  ought  to  be  given,  and  not  to  err  on  the  side 
of  assigning  it  too  small  a  share.  The  whole  of  Schedule  A. 
is  thus  assigned  to  capital,  although  it  is  well  known  that  not 
even  in  Schedule  A.  is  the  income  obtained  without  exertion 
and  care,  and  some  risk  of  loss,  which  are  entitled  to  re- 


IN    THE    LAST    HALF   CENTURY. 


401 


numeration.  In  Schedule  D.  also  I  have  allowed  that  all  the 
income  from  imblic  companies  and  foreign  investments  is 
from  idle  capital,  although  here  the  vigilance  necessary,  and 
the  risk  attendant  on  the  business,  are  really  most  serious, 
and  part  of  the  so-called  profit  is  not  really  interest  on  idle 
capital  at  all,  but  strictly  tlic  remuneration  of  labour.  I  have 
also  rather  exaggerated  than  depreciated  the  estimate  for 
capital  employed  in  trades  and  professions,  my  estimate  being 
ather  more  than  that  of  Mr.  Dudley  Baxter  in  his  famousi- 
paper  on  the  National  Income.  With  these  explanations 
I  submit  the  accompanying  estimate  of  the  share  of  capital 
in  the  income-tax  income  at  different  dates  (see  p.  402). 
This  estimate  may  be  summarised  as  follows : — 

Summary  of  Analysis  op  Income-Tax  Income  en  undermentioned 

Years. 

[la  millions  of  pounds.] 


Year. 

From  Capital. 

From  Salaries, 
&c. 

Total. 

1S43        . 
1862        . 
1881        . 

£ 

188i 
252^ 
407 

£ 
93| 

177 

282 
360 
584 

Thus  a  very  large  part  of  the  increase  of  the  income-tax 
income  in  the  last  forty  years  is  not  an  increase  of  the 
income  from  capital  at  all  in  any  proper  sense  of  the  word. 
On  the  contrary,  the  increase  in  the  income  from  capital  is 
only  about  two-tliirds  of  the  total  increase.  This  increase  is, 
moreover,  at  a  less  rate  than  the  increase  of  the  capital  itself, 
as  appearing  from  the  Probate  Duty  returns,*  a  point  which 


*  These  returus,  however,  it  should  always  be  remembered,  do  uot 
inchide  real  property. 


II. 


2  D 


402 


THE   PROGRESS   OF   THE   WORKING   CLASSES 


Analysis  of  the  Ixcome  Tax  Eeturns  for  the  undeementioned 
Years,  showing  the  Estimated  Income  from  Capital  on  the 

ONE   side,   and   the  ESTIMATED  INCOME   FROM  WaGES  OF  SUPER- 
INTENDENCE AND  Salaries  on  the  other  side. 

[lu  millions  of  pounds,  000,000's  omitted,  i.e.,  10  =  £10,000,000.] 


Schedule  A. — 

Land,  tithes,  &c.,| 
exclusive  of[ 
houses     .         . ) 

Messuages,  &c.    . 

Schedule  B.— 
Occupation  of  land 

Schedule  C.    . 

„        D.  (Part  I.) 

„      „  (  „  n.) 

„        E.    .         . 

1881. 

1862. 

1843. 

From 
Capital. 

From 
Salaries, 

From 
Capital. 

From 

Salaries, 

&c. 

From 
Capital. 

From 

Salaries, 

&c. 

70, 
117, 

25,* 

40, 
64,  t 
91, 

nil 

nil 
nil 

44, 

nil 

100,  t 

nil 

33, 

60, 
62, 

22.S 

29, 
32, 

47, 
nil 

nil 
nil 

38i, 

nil 
49, 
nil 

20, 

57, 
41, 

20, 

29, 

29  J, 

12, 

nil 

nil 
nU 

36, 

nil 

46i, 

nil" 

n. 

407, 

177, 

-~r~'i. 

107i, 

i88i, 

93i, 

Note. — In  the  estimate  for  1843  the  figures  assigned  to  Schedule  A. 
are  only  those  of  lands  and  tithes  and  houses  to  correspond  with  the 
existing  Schedule  A. :  and  the  figures  of  Schedule  D.  include  mines, 
quarries,  railways,  &c.,  now  in  Schedule  D.  An  estimate  is  also  made 
of  the  totals  for  Ireland,  based  on  the  returns  of  1854,  the  total  gross 
income  under  all  the  schedules  thus  estimated  being  about  30  million 
pounds. 

*  Interest  on  500  millions  of  capital  in  1881  at  5  per  cent.  In  my 
paper  on  accumulations  of  capital,  I  estimated  agricultural  capital  at 
a  larger  sum  than  this;  but  since  then  there  has  been  some  loss  of 
agricultural  capital,  and  if  a  larger  sum  were  taken,  the  rate  of  interest 
used  in  the  calculation  for  tlie  present  purpose  should  be  less. 

t  Estimating  that  the  income  here  is  worth  four  years'  purchase, 
and  that  it  may  be  capitalised  at  that  rate;  and  then  allowing  that 
this  ca])ital  earns  10  per  cent.,  the  rest  being  wages  of  superintendence 
or  salaries. 


IN   THE  LAST  HALF  CENTURY.  403 

deserves  special  notice.  The  conclusion  therefore  is,  that  the 
working  classes  have  not  been  losing  in  the  last  fifty  years 
through  the  fruits  of  their  labour  being  increasingly  appro- 
priated to  capital.  On  the  contrary,  the  income  from  capital 
lias  at  least  no  more  than  kept  pace  with  the  increase  of 
capital  itself,  wliile  the  increase  of  capital  per  head,  as  we 
have  seen,  is  very  little ;  so  that  it  may  be  doubted  whether 
the  income  of  the  individual  capitalist  from  capital  has  on 
the  average  increased  at  all.  If  the  return  to  capital  had 
doubled,  as  the  wages  of  the  working  classes  appear  to  have 
doubled,  the  aggregate  income  of  the  capitalist  classes  re- 
turned to  the  income  tax  would  now  be  800  instead  of 
400  millions.  In  other  words,  it  would  not  be  far  short  of 
the  mark  to  say  that  almost  the  whole  of  the  great  material 
improvement  of  the  last  fifty  years  has  gone  to  the  masses. 
The  share  of  capital  is  a  very  small  one.  And  what  has 
not  gone  to  the  workmen  so-called,  has  gone  to  remunerate 
people  who  are  really  workmen  also,  the  persons  whose 
incomes  are  returned  under  Schedule  D.  as  from  "Trades 
and  Professions."  The  capitalist  as  such  gets  a  low  in- 
terest for  his  money,  and  the  aggregate  return  to  capital 
is  not  a  third  part  of  the  aggregate  income  of  the  country, 
which  may  be  put  at  not  less  than  1200  millions,  and 
is,  I  should  estimate,  not  much  more  than  a  fourth 
part. 

It  will  be  interesting  I  think  to  present  these  conclusions 
in  the  form  of  an  account.  We  have  not,  as  I  have  already 
said,  an  exact  statement  of  aggregate  earnings,  either  at  the 
beginning  or  at  the  end  of  the  period ;  but  assuming  the  aggre- 
gate income  of  the  people  as  about  1200  millions  now,  and 
that  the  wages  of  working  men  are,  per  head,  twice  what 
they  were,  the  aggregates  in  1843  and  at  the  present  time 
would  compare  as  follows  : 

li  D  2 


404  the  progress  of  the  working  classes 

Progress  of  National  Income. 

[In  millions  of  pounds.] 


Capitalist  classes  from  capital 
Working  income  in  income-"! 

tax  returns       .         .         .  / 
Working  income  not  in  in-"i 

come-tax  returns       .         .  j 

Income 
in  1843. 

Income 

at 

Present 

Time. 

Increase. 

Amount. 

Per  Cent. 

190 
90 

-35 

£ 

400 

180 

620 

£ 
210 

90 
385 

110 

100 
160 

515 

1,200 

685 

130 

Progress  of  National  Capital  Paying  Probate  Duty. 


Amount  of  capital 
„        per  estate 

1838. 

Present 
Time. 

Increase. 

Amount. 

Per  Cent. 

£ 

55  mlns. 
2,200 

£ 
140  mlns. 

2,500 

£ 
85  mlns. 

300 

155 
14 

Note. — Increase  of  working  income  per  head  100  per  cent. 

From  this  it  appears  that  the  increase  of  what  is  known  as 
working-class  income  in  the  aggregate  is  greater  than  that 
of  any  other  class,  being  160  per  cent.,  while  the  return  to 
capital  and  the  return  to  what  are  called  the  capitalist 
classes,  whether  it  is  from  capital  proper  or,  as  I  maintain,  a 
return  only  in  tlie  nature  of  wages,  has  only  increased  about 
100  per  cent.,  although  capital  itself  has  increased  over  150  per 
cent.  At  the  same  time  the  capitalist  classes  themselves 
have  greatly  increased  in  number,  so  that  tlie  amount  of 
capital  possessed  among  them  per  head  has  only  increased 
15  per  cent.,  notwithstanding  the  great  increase  in  capital 


IN   THE   LAST    HALF   CENTURY.  405 

itself,  and  the  average  income  per  head  can  liave  hardly 
increased  at  all.  On  the  other  hand,  as  the  masses  of  the 
nation,  taking  the  United  Kingdom  altogether,  have  only- 
increased  about  30  per  cent,  since  1843,  when  these  income 
tax  figures  begin,  while  their  aggregate  incomes  have  in- 
creased IGO  per  cent.,  it  is  explained  how  these  incomes  have 
gained,  individually,  about  100  per  cent,  as  against  hardly 
any  increase  at  all  in  the  incomes  of  what  are  called  the 
capitalist  classes,  on  the  average.  Thus  the  rich  have 
become  more  numerous,  but  not  richer  individually ;  the 
"  i)Oor  "  are,  to  some  smaller  extent,  fewer ;  and  those  who 
remain  "  poor "  are,  individually,  twice  as  well  off  on  the 
average  as  they  were  fifty  years  ago.  The  "  poor  "  have  thus 
had  almost  all  the  benefit  of  the  great  material  advance  of  the 
last  fifty  years. 

We  may  now  conclude  this  long  inquiry.  It  has  been 
shown  directly,  I  believe,  that,  while  the  individual  incomes 
of  the  working  classes  have  largely  increased,  the  prices  of 
tlie  main  articles  of  their  consumption  have  rather  declined ; 
and  the  inference  as  to  their  being  much  better  off  which 
would  be  drawn  from  these  facts  is  fully  supported  by 
statistics  showing  a  decline  in  the  rate  of  mortality,  an 
increase  of  the  consumption  of  articles  in  general  use,  an 
improvement  in  general  education,  a  diminution  of  crime  and 
pauperism,  a  vast  increase  of  the  number  of  depositors  in 
savings  banks,  and  other  evidences  of  general  well-being. 

Finally,  the  increase  of  the  return  to  capital  has  not  been 
in  any  way  in  proportion,  the  yield  on  the  same  amount  of 
capital  being  less  than  it  was,  and  the  capital  itself  being 
more  diffused,  wliile  the  remuneration  of  labour  lias  enor- 
mously increased.  The  facts  are  what  we  should  have 
expected  from  tlie  conditions  of  production  in  recent  years. 


406  THE   PROGRESS    OF    THE   -WOllKING   CLASSES 

Inventions  having  been  multiplied,  and  production  having 
been  increasingly  efficient,  while  capital  has  been  accumu- 
lated rapidly,  it  is  the  wage  receivers  who  must  have  the 
benefit.  The  competition  of  capital  keeps  profits  down  to 
the  lowest  point,  and  workmen  consequently  get  for  them- 
selves nearly  the  whole  product  of  the  aggregate  industry  of 
the  country.  It  is  interesting,  nevertheless,  to  find  that  the 
facts  correspond  with  w'hat  theory  should  lead  us  to 
anticipate. 

The  moral  is  a  very  obvious  one.  "Whatever  may  be  said 
as  to  the  ideal  perfection  or  imperfection  of  the  present 
economic  regime,  the  fact  of  so  great  an  advance  having 
been  possible  for  the  masses  of  the  people  in  the  last  half- 
century  is  encouraging.  It  is  something  to  know  that 
whether  a  better  regime  is  conceivable  or  not,  human  nature 
being  what  it  is  now  (and  I  am  one  of  those  who  think  that 
the  regime  is  the  best,  the  general  result  of  a  vast  community 
living  as  the  British  nation  does,  with  all  the  means  of 
healthy  life  and  civilisation  at  command,  being  little  short 
of  a  marvel  if  we  only  consider  for  a  moment  what  vices 
of  anarchy  and  misrule  in  society  have  had  to  be  rooted  out 
to  make  this  marvel)  ;  still,  whether  best  or  not,  it  is  some- 
thing to  know  that  vast  improvement  has  been  possible  with 
this  regime.  Surely  the  lesson  is  that  the  nation  ought  to  go 
on  improving  on  the  same  lines,  relaxing  none  of  the  efforts. 
which  have  been  so  successful.  Steady  progress  in  the 
direction  maintained  for  the  last  fifty  years  must  soon  make 
the  English  people  vastly  superior  to  what  they  are  now. 

I  should  like  to  add  just  one  or  two  remarks  bearing  on 
questions  of  the  moment,  and  as  to  the  desirability  or- 
possibility  of  a  change  of  regime  now  so  much  discussed, 
which  the  figures  I  have  brought  before  you  suggest.  One 
is,  that  apart  from  all  objections  of  principle  to  schemes  of 


IN  THE  LAST   HALF  CENTURY.  407 

confiscating  capital, — land  nationalisation,  or  collectivisni,  or 
whatever  they  may  be  called, — the  masses  could  not  hope  to 
have  much  to  divide  l»y  any  such  schemes.  Taking  the 
income  from  capital  at  400  millions  pounds,  we  must  not 
suppose  that  the  whole  of  that  would  be  divisible  among  the 
masses  if  capital  were  confiscated.  Wliat  the  capitalist 
classes  spend  is  a  very  different  thing  from  what  they  make. 
The  annual  savings  of  the  country  now  exceed  200  million 
pounds,  being  made  as  a  rule,  though  not  exclusively,  by  the 
capitalist  classes.  If  then  the  400  million  pounds  were  to  be 
confiscated,  one  of  two  things  would  happen :  either  the 
savings  would  not  be  made,  in  which  case  the  condition  of 
the  working  classes  would  soon  deteriorate,  for  everything 
depends  upon  the  steady  increase  of  capital ;  or  the  savings 
would  be  made,  in  which  case  the  spending  power  of  the 
masses  would  not  be  so  very  much  increased.  The  difference 
Avould  be  that  they  would  be  owners  of  the  capital,  but  the 
income  would  itself  remain  untouched.  The  system  under 
whicli  large  capitals  are  in  a  few  hands  may,  in  fact,  have  its 
good  side  in  this,  that  the  Jay  Goulds,  Vanderbilts,  and 
Eothschilds  cannot  spend  their  income.  The  consequent 
accumulation  of  capital  is,  in  fact,  one  of  the  reasons  why 
the  reward  for  labour  is  so  high,  and  the  masses  get  nearly 
all  the  benefit  of  the  great  increase  of  production.  The 
other  remark  I  have  to  make  is  that  if  the  object  really 
aimed  at  by  those  who  talk  of  land  nationalisation  and  the 
like  is  carried  out,  the  people  who  will  suffer  are  those  who 
receive  large  wages.  To  effect  what  they  intend,  the  agitators 
must  not  merely  seize  on  the  property  of  a  few,  they  must 
confiscate  what  are  as  much  earnings  as  those  of  a  mechanic 
or  a  labourer,  and  the  wages  of  the  most  skilled  mechanics 
and  artisans  themselves.  The  agitation  is,  in  fact,  to  level 
down,  to  diminish  the  reward  of  labourers  who  receive  a  large 


408  THE   PROGRESS   OF  THE  WORKING   CLASSES. 

wage  because  they  can  do  the  work  the  community  requires, 
the  proof  being  that  in  a  market  without  favour  they  get  the 
wage,  and  to  increase  the  reward  of  other  labourers  beyond 
what  in  the  same  free  market  the  community  would  freely 
give  them.  \V3iether  the  production  would  be  continued  at 
all  if  there  were  any  success  in  these  attempts,  common 
sense  will  tell  us.  Those  who  have  done  some  hard  work  in 
the  world  will,  I  am  sure,  agree  with  me  that  it  is  only  done 
by  virtue  of  the  most  powerful  stimulants.  Take  away  the 
rewards,  and  even  the  best  would  probably  not  give  them- 
selves up  to  doing  what  the  community  wants  and  now  pays 
them  for  doing,  but  they  would  give  themselves  up  either  to 
idleness  or  to  doing  something  else.  The  war  of  the  land 
nationaliser  and  Socialist  is'  then  not  so  much  with  the 
capitalist  as  with  the  workman,  and  the  importance  of  this 
fact  should  not  be  lost  svAit  of. 


(     409     ) 


XI. 

FUKTHER  NOTES  ON  THE  PROGKESS  OF  THE 
WORKING  CLASSES.* 

The  great  interest  attaching  to  it  must  be  my  excuse  for 
returning  to  the  subject  of  my  inaugural  address  as  President 
in  the  session  of  1883-1884.  I  do  not  propose  to  bring 
forward  many  new  facts  :  the  most  important,  in  truth,  lie 
on  the  surface,  and  apart  from  an  elaborate  investigation, 
which  has  yet  to  be  made,  and  which  may  in  fact  be  im- 
possible, owing  to  the  defectiveness  of  the  earlier  records,  I 
doubt  whether  much  could  be  added  to  the  triple  and  quad- 
ruple chain  of  evidence  by  which  the  great  progress  of  the 
working  classes  in  the  last  half  century  is  proved.  The 
great  rise  of  money  wages  among  labourers  of  every  class, 
coupled  with  stationary  or  even  falling  prices  of  commodities 
on  the  average,  the  all  Init  univ^ersal  shortening  of  the 
hours  of  labour,  the  decline  of  pauperism,  the  enormously 
increased  consumption  of  the  luxuries  of  the  masses,  the 
improvement  in  the  rate  of  mortality — these  and  other 
facts  combine  to  prove  tliat  tliere  has  been  a  great 
general  advance  in  well-being  among  the  masses  of  the 
community.  The  evidence  is  cumulative,  and  to  disprove  or 
throw  doubt  on  one  item  in  tlie  long  list  of  particular  facts 

*  Read  before  the  Statistical  Society,  19th  January,  1886.  The  Ap- 
pendices referred  to,  are  intended  to  be  puhlislied  along  with  the  paper 
and  discussion  in  the  Statistical  Society's  Journal  for  March,  1886. 


410  FURTHER  NOTES  ON  THE  PROGRESS 

supporting  any  one  of  these  propositions  hardly  affects  the 
impression  given  by  the  survey  of  the  whole.  To  justify  the 
belief  that  there  has  been  no  great  general  advance,  every 
one  of  these  propositions  would  have  to  be  disproved,  and  an 
opposite  set  of  statements,  all  hanging  together  and  all 
supporting  the  view  of  retrogression,  or  no  advance,  or  very 
little  advance,  would  have  to  be  made  good.  There  are  too 
many  facts  to  permit  the  setting  up  of  a  plea  of  ignorance 
or  impossibility  of  arriving  at  any  conclusion.  But  while 
hoping  to  add  very  little  to  the  main  propositions  formerly 
advanced,  it  may  perhaps  be  possible  to  clear  up  some  mis- 
conceptions which  have  arisen,  and  to  discuss  a  few  sub- 
sidiary or  connected  questions  which  are  intrinsically  of 
great  importance  :  questions  as  to  the  degree  of  the  improve- 
ment, as  to  the  way  in  which  it  is  diffused,  as  to  the  im- 
provement in  other  countries,  as  to  the  movements  in  prices 
which  have  occurred  or  are  in  progress,  as  to  what  is  meant 
by  the  phrase  "  working  classes,"  and  whether  for  purposes 
of  strict  economic  discussion  the  meaning  of  the  phrase,  as 
popularly  understood,  ought  not  to  be  widened — are  all 
raised  by  the  general  discussion,  and  their  consideration 
should  help  to  throw  light  on  the  main  question  itself.  In 
any  case  the  paper  will  be  a  peg  for  discussion  among 
yourselves,  on  a  subject  which  happens  to  attract  an  unusual 
degree  of  attention  at  the  present  moment. 


I.—TIIE  REASONS  FOR  A   FIFTY  YEARS' 
COMPARISON. 

Befoee  passing  on  to  some  of  the  points  just  mentioned,  let 
me  glance  only  for  a  moment  at  a  preliminary  point,  which 
has  given  rise  to  observations  at  which  I  have  been  very 


OF   THE  WOKKING    CLASSES,  411 

much  astonished.  "VVliy  select  f<n-  cmnparison  with  tho 
present  time,  it  has  been  said,  a  period  just  half  a  century 
ago  ?  It  lias  even  been  hinted,  I  believe,  tliat  being  no  friend 
of  the  working  classes,  and  holding  a  brief  from  the  capitalist 
classes,  so  called,  against  them,  I  selected  the  date  of  half  a 
century  ago  with  malice  aforethought,  knowing  that  tlio 
working  classes  were  then  in  a  state  of  special  degradation ; 
so  that  what  I  show  as  an  improvement  in  their  condition  is 
really  no  more,  or  little  more,  than  a  recovery  of  the  position 
which  they  formerly  held.  In  reply  to  all  tliis  I  am  sure  it 
is  hardly  necessary  to  repeat  here,  what  must  have  appeared 
so  reasonable  to  all  of  you — that  the  date  of  fifty  years  ago 
was  selected  because  it  happened  to  be  the  jubilee  of  the 
Statistical  Society,  and  the  beginning  of  various  official 
statistical  records  which  are  beyond  measure  useful  and  even 
indispensable  in  such  investigations.  I  do  not  know  tliat  it 
would  have  been  possible  to  give  a  better  or  more  natural 
reason.  In  a  Society  formed  to  promote  the  study  of  statis- 
tics, and  where  special  attention  has  always  been  given  to 
this  kind  of  investigation,  it  is  surely  of  the  highest  utility 
that  on  the  occasion  of  our  jubilee  we  should  review  the 
history,  and  see  what  the  statistics,  which  we  have  helped 
not  a  little  to  improve,  tell  us  regarding  the  problems  it-  lias 
been  our  object  as  a  Society  to  in([nire  into.  There  must  be 
some  very  clever  people  in  the  world,  when  the  explanation 
of  a  deep  design  against  the  working  classes  as  the  motive 
for  choosing  the  period  half  a  century  ago  can  be  substituted 
for  the  very  obvious  and  natural  explanation  wliirh  I  gave  in 
the  address  itself. 

I  have  not  introduced  this  point,  however,  merely  to  give 
a  personal  explanation.  The  selection  of  a  date  half  a 
century  ago  for  comparison  witli  the  present  time  liaving 
been  challenged,  I  sliould  like  to  point  out  that  in  fact,  and 


412         FURTHER  NOTES  ON  THE  PROGRESS 

apart  from  the  reasons  I  have  given,  such  a  period  is  a  very 
good  one  to  select.  The  danger  of  short  periods  in  such 
discussions  is  obvious.  There  are  so  many  complicated 
causes  affecting  human  affairs,  and  there  is  so  much  oscilla- 
tion and  fluctuation  in  them,  that  if  short  periods  only  are 
taken  into  account,  what  is  in  fact  an  eddy  in  the  main 
stream  of  events  may  be  mistaken  for  the  main  stream  itself. 
We  see  this  mistake  made  in  some  of  the  fair  trade  discus- 
sions now  going  on,  a  decline  in  the  value  of  our  exports  at 
present  being  spoken  of  as  if  it  were  a  permanent  decline, 
whereas  in  our  own  country,  ever  since  we  had  such  records, 
and  in  every  country  that  has  had  them,  there  have  been 
from  time  to  time  in  particular  years  declines  in  aggregate 
value  of  a  far  more  marked  character  than  anything  we  are 
now  witnessing,  these  fluctuations,  however,  being  quite  con- 
sistent with  steady  progress  from  period  to  period.  I  do  not 
say  that  comparisons  are  not  to  be  made  at  all  for  short 
periods :  for  many  purposes  such  comparisons  are  useful. 
But  for  a  purpose  like  tlie  one  now  in  hand,  any  comparison  of 
the  general  condition  of  the  working  classes  would  not  only 
be  difficult  for  a  very  short  period,  but  would  perhaps  be  im- 
possible. A  comparison  for  a  period  of  fifty  years  in  an  age 
of  great  movement  is  free  from  many  of  the  difficulties  inci- 
dental to  a  shorter  period.  It  allows  for  the  occurrence  of 
several  natural  cycles  of  prosperity  and  adversity  in  trade, 
and  gives  time  for  adjustments  in  money  wages  and  prices 
due  to  currency  and  money  market  changes,  or  to  such  events 
as  the  gold  discoveries  of  Australia  and  California,  to  be 
made.  On  the  other  hand,  as  compared  with  longer  periods, 
a  period  only  fifty  years  ago  is  more  easily  understood  ;  there 
are  many  persons  living  who  can  remember  so  far  back,  and 
whose  memory  can  check  any  slips  that  are  apt  to  be  made 
by  the  mere  student  of  records  without  a  knowledge  of  the 


OF   THE    WORKING    CLASSES.  413 

actual  life.  In  other  words,  fifty  years  is  pcrhai)S  a  long 
enoufrh  period  for  comparison  in  an  n<^e  of  active  movement, 
as  a  distinct  step  in  one  direction  or  another  can  be  per- 
ceived ;  and  it  is  not  too  long  a  period,  looking  to  the  facili- 
ties for  check,  and  for  tlie  proper  understanding  of  the  facts, 
which  its  nearness  to  the  present  time  presents. 

I  should  like  to  add  farther  that  a  comparison  with  a  date 
fifty  years  ago  has  this  advantage,  that  we  do  in  fact  know 
from  Porter's  'Progress  of  tlie  Nation'  that  considerable 
progress  was  made  by  the  masses  of  the  community  between 
the  beginning  ofthe  century  and  the  year  183G,  when  he  wrote 
liis  book.  That  was  Porter's  view,  at  any  rate,  and  although 
every  such  opinion  is  of  course  subject  to  criticism,  the  fact 
that  a  statistician  like  Porter,  writing  at  the  time,  and 
acquainted  with  the  notions  then  prevalent,  as  well  as  with 
the  official  figures,  should  assume  the  fact  of  considerable 
progress  in  his  time,  is  of  course  of  great  weight.  Having 
given  some  attention  to  Porter's  figures,  I  have  come  to  the 
conclusion  that  the  evidence  lie  presents  is  very  strong,  that 
there  was  progress  among  tlie  masses  in  the  first  thirty  or 
forty  years  of  the  century,  though  nothing  so  decisive  as 
what  has  since  taken  place.  Virtually  then,  if  we  accept 
Porter's  conclusion,  we  are  able  to  assert  a  continuous  im- 
provement among  the  masses  of  the  community  from  the 
beginning,  or  nearly  the  beginning,  of  the  century  to  the 
present  time — a  very  long  period  indeed  in  tlie  life  of  a 
nation.  In  a  practical  discussion,  looking  at  the  way  the 
entire  conditions  of  life  and  industry  have  changed  in  the 
period  in  question,  it  would  not  be  expedient  I  believe  to  go 
farther  back.  There  is  little  practical  utility,  it  seems  to  me, 
in  a  comparison  between  the  comparatively  scanty  agricul- 
tural communities  which  formed  the  population  of  this 
country   at   any   time   l^efore   the  beginning  of  the  present 


-414  FURTHER  NOTES  ON  THE  PROGRESS 

century,  and  the  vast  multitudes  who  are  now  supported  by 
a  highly  developed  manufacturing  system.  We  have  in  fact 
to  consider  problems  as  affecting  these  multitudes,  wliicli 
could  not  he  considered  at  all  before  the  present  century 
commenced,  because  until  that  time  agriculture  was  the  staple 
industry,  and  the  nation  subsisted  on  wdiat  w\as  produced  at 
liome.  However  we  have  arrived  at  our  present  condition, 
we  have  to  take  the  facts  as  they  are,  and  the  main  fact  in  a 
material  view  undoubtedly  is  that  coincident  with  the  most 
unprecedented  growth  of  population  in  an  old  country, 
a  growth  far  beyond  the  limits  of  the  home  means  of  sub- 
sistence on  the  present  scale  of  living,  there  has  been  a 
ijeneral  advance  in  the  scale  of  living  itself.  How  far  the 
facts  of  the  future  are  likely  to  correspond  is  a  question  of 
the  deepest  interest,  but  on  which  antiquarian  researches, 
though  useful  in  their  own  place,  can  throw  very  little  light. 
I  should  like  to  add,  however,  by  way  of  caution  to  students 
■of  the  subject  in  its  antiquarian  aspect,  that  the  commonly 
entertained  \'iew  as  to  a  degradation  of  the  condition  of  the 
masses  of  the  people  having  occurred  before  the  period  at 
which  I  commenced,  requires  very  careful  consideration  and 
criticism.  When  mass  is  compared  with  mass  from  century 
to  century,  there  are  many  reasons  for  doubting  that 
degradation  took  j)lace  at  any  time,  and  for  believing  on 
the  contrary  in  a  slow  and  gradual  improvement  for  many 
centuries  past.  The  increasing  rapidity  in  the  growth  of 
population,  indicating  a  dkninishiQg  rate  of  mortality,  is  alone 
so  significant  as  to  throw  doubt  on  many  conclusions  as  to 
the  deterioration  of  the  masses  at  any  period.  These  con- 
clusions appear  to  have  been  formed  very  often  without 
much  attention  to  the  relative  numbers  of  different  classes  in 
different  periods,  or  to  the  question  what  classes  in  one  age 
are  the  proper  analogues  of  the  classes  in  a  different  age  ;  the 


OF  THE   WORKING  CLASSES.  415 

modern  agricultural  labourers  of  England,  for  instance,  being 
sometimes  compared  with  the  yeomen  of  a  former  time, 
whereas  the  middle  and  superior  artisan  classes  now  occupy 
the  place  in  society  of  the  former  yeomen.  Statistically  all 
sucli  questions  are  of  obvious  importance,  and  any  study 
wliich  overlooks  them  should  be  distrusted.  Wlien  tlicy  are 
attended  to,  I  doubt  if  there  is  any  period  of  more  tlian  a 
century's  duration  in  our  history  (with  the  single  exception 
perhaps  of  the  second  century  after  the  Black  Death,  after 
which  event  there  was,  according  to  all  the  authorities,  a 
sudden  and  exceptional  advance,  which  may  not  have  been 
quite  maintained)  in  which  the  condition  of  the  masses  has 
not  been  better  than  in  the  period  just  before.  At  any  rate 
the  greatest  care  is  required  in  studying  the  books  on  the 
subject. 


II.— THE  RISE  IN  MONEY  WAGES. 

Passing  from  this  preliminary  point,  I  come  to  the  question 
of  the  degree  of  improvement  in  the  condition  of  the  working 
classes  in  the  last  fifty  years.  In  my  address  I  was  careful 
not  to  give  a  precise  answer  to  this  question,  and  it  is  iiot 
one  perhaps  to  which  a  very  precise  answer  can  be  given. 
All  the  elements  are  indeterminate.  Not  only  tlie  in- 
clividuals  but  the  classes  at  different  rates  of  wage  are 
innumerable,  and  they  are  differently  constituted  at  the 
beginning  and  end  of  the  period ;  while  many  of  the  facts 
wliich  indicate  conclusively  a  great  average  advance  in  well- 
being  help  very  little  in  solving  the  fiirther  question 
as  to  the  degree  of  improvement.  But  while  no  very 
precise  answer  is  possible,  I  wisli  to  jioint  out  that  tlie 
reasons  for  believing  in  a  very  considerable  degree  of  im- 


416  FUBTHER   NOTES    ON   THE    PROGRESS 

provement,  almost  if  not  quite  to  the  extent  of  enabling  us 
to  say  that  the  working  classes  are  twice  as  well  off  as  they 
were  fifty  years  ago,  are  so  strong  as  to  be  beyond  reason- 
able doubt.  The  data  may  be  incomplete,  but  read  with  a 
little  care  they  show  us  that  the  minimum  limit  of  the 
improvement  must  be  a  very  high  one. 

As  to  the  question  of  a  great  rise  in  money  wages,  which 
is  conclusive  of  the  wdiole  matter  if  we  admit  that  prices  on 
the  average  have  not  increased,  I  do  not  suppose  tliere  is 
any  real  doubt  anywhere.  The  only  serious  challenge  to  the 
assertion  of  general  improvement  which  I  have  seen  was 
given  by  Mr.  Hutchinson  in  tlie  '  Nineteenth  Century,'  for 
October,  1884 ;  but  Mr.  Hutchinson  based  his  objection 
mainly  on  the  statement  that  prices  and  the  cost  of  living 
have  risen.  As  to  the  rise  in  money  wages,  he  says :  "  It  is 
no  part  of  my  purpose  to  dispute  that  the  working  man  of 
to-day  is  not  in  a  better  position,  that  he  is  not  better  fed, 
better  clothed,  better  housed,  and  better  educated  than  his 
immediate  fore-elders  as  a  class  may  have  been.  The  broad 
fact  is  that  with  the  advent  of  railways,  and  other  improved 
means  of  communication  and  distribution,  there  has  been  a 
greater  call  upon  liis  resources,  and  a  consequent  rise  in  the 
remuneration  of  his  labour."  This  admission,  it  may  be 
observed,  goes  even  farther  than  the  purpose  for  which  I  am 
quoting  it,  and  in  fact  admits  my  whole  argument ;  but  as 
Mr.  Hutchhison  proceeds  to  qualify  it  in  the  remainder  of 
the  last  sentence,  which  I  do  not  quote,  though  I  think  his 
qualification  really  inconsistent  with  the  admission  itself,  I 
only  quote  it  for  what  he  does  substantially  admit ;  viz.,  the 
fact  of  a  rise  in  the  remuneration  of  labour.  It  is  true  that 
Mr.  Hutchinson  adds  in  a  foot-note,  "  From  oral  information 
obtained  in  answer  to  questions  addressed  to  the  older  work- 
men in  various  trades,  as  to  the  relative  position  monetarily 


OF   THE   WORKINQ   CLASSES.  417 

of  tlie  two  periods,  I  am  disposed  to  doubt  that  tlicre  lias 
l)een  such  au  advance  all  round  as  Mr.  Giifen  states."     But 
this  "  disposition  to  douht,"  without  any  stated  facts  to  back 
it,  and  without  defining;  wliat  he  understands  me  to  liave  said 
on  this  liead,  does  not  amount  to  much,  and  the  statement 
of  a  great  rise  in  money  wages  passes  in  fact  unchallenged. 
I  may  add  that  in  the  course  of  a  very  voluminous  corre- 
spondence, which  my  address   two  years  ago  has   entailed 
npOn  me,  I  have  not  had  a  single  letter  questioning  the  fact  \ 
of  a  great  rise  in  money  wages,  though  I  have  had  not  a  few  \ 
letters  in  the  opposite  sense.     This  negative   confirmation,   > 
when   there   are   so   many  people   living  who   could    state 
contradictory  facts  if  they  knew  them,  is  obviously  of  the 
highest  value. 

Still,  in  the  absence  of  express  questions,  and  of  any 
allegation  of  contradictory  facts,  there  is  some  unwillingness 
to  admit,  I  think,  the  full  meaning  of  the  facts  wliich  I 
stated.  Improvement  of  some  kind  is  admitted,  but  there  is 
a  vague  feeling  that  the  figures  are  too  few  to  support  the 
conclusion  which  I  drew,  that  it  is  at  least  between  50  and 
100  per  cent.,  and  with  an  allowance  for  the  shortening  of 
the  hours  of  labour,  may  be  placed  nearer  the  100  than  the 
50,  if  not  over  the  100.  I  confess  that  an  improvement  of 
50  per  cent.,  apart  from  the  shortening  of  the  hours  of  labour, 
would  in  my  opinion  l)e  immense,  and  I  should  l)e  quite 
satisfied  with  the  general  admission  of  so  great  an  improve- 
ment. All  I  would  urge  is  that  while  so  much  improve- 
ment must  at  least  be  admitted,  there  is  no  small  gi'ound 
for  adopting  the  higlier  figure  of  100  per  cent,  or  there- 
abonts. 

Now  as  to  the  fewness  of  the  figures  respecting  tlie  rise  in 
money  wages  which  I  quoted,  let  me  point  out  that  having 
regard  to  tlie  sources  from  wliich  tlie  figures  were  taken,  and 
n.  2  E 


418  FUETHER    NOTES    ON    THE    PROGRESS 

the  nature  of  the  facts  to  he  ilhistrated,  the  results  were  of  a 
convincing  kind.  What  I  did  mainly  was  to  take  the 
records  of  wages  from  the  volumes  of  trade,  revenue,  &c., 
fifty  years  ago,  and  wherever  it  was  possible  to  obtain  a 
figure  at  that  time  which  could  properly  be  compared  with 
the  similar  figures  in  the  "  Miscellaneous  Statistics  "  at  tlie 
present  time,  to  make  the  comparison.  In  addition,  I 
referred  to  the  only  other  official  record  of  wages  we  have 
got,  that  of  seamen,  though  it  only  goes  back  for  about 
thirty  years ;  and  tlie  only  unofficial  figure  I  quoted  was 
that  of  Sir  James  Caird  with  reference  to  the  wages  of  the 
agricultural  labourer,  his  figure  in  turn  being  based  largely 
on  official  evidence.  Substantially,  then,  what  I  made  use  of 
as  far  as  possible  were  official  data,  such  as  they  were, 
without  any  process  of  selection  or  adaptation.  The  result 
was  that  among  the  sixteen  items  obtained  for  comparison 
from  the  miscellaneous  statistics,  there  was  in  all  cases  an 
advance  of  some  sort,  and  only  in  three  instances  an  advance 
of  less  than  50  per  cent.  Tlie  advance  was  generally  over 
70  per  cent.,  and  in  some  cases  over  100  per  cent.  The 
trades  referred  to  included  the  textile  manufactures,  mines^ 
and  the  housebuilding  trades,  embracing  therefore  a  large 
part  of  the  population.  As  regards  seamen's  wages  again,, 
the  record  showed  usually  an  advance  of  about  70  per  cent, 
in  thirty  years.  I  am  still  of  opinion  that  such  figures, 
corroborated  as  they  were  by  Sir  James  Caird's  conclusion 
as  to  the  advance  in  agricultural  wages,  were  entitled 
logically  to  very  great  weight.  There  having  been  nothing 
arbitrary  in  the  process  of  selection,  it  was  imiiossible  to 
suppose  that  accident  could  have  brought  it  about  that  in 
all  cases  where  a  comparison  could  be  made  there  should 
invariably  be  found  a  large  money  advance.  As  we  must 
assume   that  like   causes   produce  like  effects,  there  must 


OF   THK    WORKING    CLASSES.  419 

equally  have  been  an  advance  in  those  wa^fes  where  no 
comparison  could  be  made.  I  am  disposed  even  to  fjo 
farther  in  tliis  question  of  tlie  bearing  of  tlie  evidence. 
Where  it  is  M-ell  ascertained  in  a  number  of  cases  that  the 
remuneration  of  workmen  for  precisely  the  same  labour  is 
100  per  cent.,  and  in  others  say  50  per  cent,  more  than  it 
was,  I  am  disposed  to  believe  that  the  advance  all  round 
must  approacli  to  the  hi^lier  figure.  It  is  the  higher 
percentage  which  should  be  held  to  be  the  governing  per- 
centage. The  reason  is  that  the  maximum  increase  would 
not  be  ])aid  in  any  case  without  a  real  scarcity  of  the 
labour  required  in  proportion  to  the  work  to  be  done ; 
that  this  scarcity  could  only  arise  in  a  rapidly  increasing 
population  either  from  a  disproportionate  growth  of  the 
industry,  which  does  not  appear  to  have  occurred  in  some 
of  the  cases  in  question,  or,  in  the  absence  of  such  a 
disproportionate  growth,  from  a  demand  for  the  labour  in 
other  pursuits  ;  and  that  on  the  other  hand  the  smaller 
percentage  of  increase  in  other  cases  miglit  arise  from  the 
substitution  of  one  kind  of  labour  for  anotlier,  the  proper 
comparison  in  the  latter  case  being  not  between  the  actual 
payments  at  different  times  for  the  same  work  done,  but 
between  the  payments  to  the  lal)ourers  engaged  and  tlie 
payments  which  would  have  been  made  to  tliem  for  the 
inferior  labour  from  which  they  have  been  taken  away.  To 
put  a  concrete  instance :  it  is  quite  possible  that  the  lower 
kinds  of  skilled  work  may  now  be  performed  by  workmen  or 
the  children  of  workmen  who  were  previously  wholly  un- 
skilled— who  were  agricultural  or  general  labourers.  In 
that  case  the  wages  they  receive  for  the  higlu'r  work  ari' 
properly  to  be  compared  with  those  they  received  as  un- 
skilled labourers,  not  with  those  formerly  paid  for  the  same 
work.     Were  this  to  be  done,  the  general  rate  of  advance 

2  E  2 


420  FURTHER  NOTES  ON  THE  PROGRESS 

would  be  found  to  correspond  more  nearly  than  might  at 
first  be  thought  with  the  maximum  advance  in  particular 
cases. 

It  may  perhaps  be  urged  per  contra  that  there  may  be  a 
deterioration  of  labour ;  that  there  are  high  wages  in  certain 
cases,  because  workmen  refuse  to  learn  and  are  becoming  less 
skilled,  and  not  because  of  a  scarcity  of  skilled  labour  arising 
from  an  increased  demand  for  it,  and  that  the  lower  per- 
centage of  increase  in  other  cases  is  due  to  the  inroad  of 
competitors  from  above  and  not  from  below.  Such  an 
explanation  it  appears  to  me  would  be  very  far  fetched 
indeed,  and  would  be  quite  inconsistent  with  the  general 
conditions  of  modern  industry,  which  makes  heavier  and 
heavier  demands  on  the  intelligence,  education,  and  moral 
qualities  of  the  workman.  But  if  no  such  explanation  is 
admissible,  then  we  must  admit  that  among  instances  of 
increase  of  wages  among  the  working  classes  for  apparently 
the  same  work,  the  higher  percentages  of  increase  are  more 
likely  to  correspond  with  the  average  general  increase  in 
wages  than  are  the  lower  percentages. 

The  point  does  not  seem  to  me  doubtfiil,  but  in  any  case  it 
is  one  on  which  a  judgment  must  be  formed  when  we  are 
dealing  with  so  complicated  a  question  as  the  general  in- 
crease of  wages  in  a  country  like  England.  The  employments 
in  the  aggregate  being  so  entirely  different  from  what  they 
were  formerly,  many  new  ones  coming  into  existence,  while 
the  old  ones  die  out,  we  must  remember  that  the  comparison 
of  wages  in  the  same  employments,  that  is,  for  precisely  the 
same  work,  only  gives  an  approximation  to  the  result  which 
we  wish  to  arrive  at.  The  question  remains  whether  the 
ruling  tendency  has  been  to  change  from  employments  at 
low  waf^es  to  employments  at  high  wages,  and  if  that  be  the 
case,  then  the  changes  showing  a  maximum  increase  in  rates 


OF   THE    WORKINQ   CLASSES.  421 

for  .apparently  tlie  same  work  arc  more  likely  to  correspond 
with  the  avera«>e  improvement  than  are  changes  showing  a 
minimum  increase. 

There  is  another  aspect  of  the  question  which  has  also  to 
he  considered.  The  wages  mainly  dealt  with  in  the  figures 
which  I  quoted  from  the  "  JMiscellaneous  Statistics  "  were 
tliose  of  the  artisan  classes.  I  was  content,  as  regards  the 
wages  of  agricultural  labour  in  Great  Britain,  to  refer  to  Sir 
James  Caird  as  an  authority  for  an  increase  of  GO  per  cent, 
in  the  latter  case.  What  I  have  now  to  point  out  is,  that 
looking  at  the  facts  broadly,  and  granting  that  tlie  artisan 
classes  on  the  average  have  only  improved  about  50  per  cent, 
or  thereabouts  in  money  wages,  yet  the  facts  that  the  artisan 
classes  as  a  rule  are  better  paid  in  money  to  the  extent  of  50 
l^er  cent,  and  upwards  than  the  agricultural  labourers,  and 
that  tlie  increase  of  population  in  the  last  fifty  years  has  been 
among  the  artisan  and  middle  classes,  the  agricultural 
labourers  having  diminished  in  numbers,  would  in  fact  imply 
that  the  average  money  wages  of  the  working  classes  of  the 
community,  looking  at  them  in  the  mass,  and  comparing  the 
mass  of  fifty  years  ago  with  the  mass  of  the  present  time, 
have  increased  very  nearly  100  per  cent.  The  average  was 
determined  in  Great  Britain  fifty  years  ago  by  a  mass 
composed  in  nearly  equal  proportions  of  agricultural  and 
non-agricultural  labour  ;  in  the  United  Kingdom  it  was  com- 
l)Osed  in  nearly  equal  parts  of  non-agricultural  laljour  in 
Great  Britain,  of  agricultural  labour  in  Great  Britain,  and  in 
the  poorly  paid  labour  of  Ireland,  agricultural  and  non- 
agricultural  together,  receiving  in  the  aggregate  only  half  tlie 
rate  per  head  of  even  the  agricultural  labour  of  Great  Britain, 
and  only  a  third  or  less  of  the  rate  per  head  of  the  non- 
agricultural  labour  of  Great  Britain.  Now  the  mass  is 
composed  in  something  like  the  following  proportions : — 


422 


FUETHER    NOTES    ON    THE    PROGRESS 


Xon-agricultural  labour  in  Great  Britain 
Agricultural  labour  in  Great  Britain     . 
Labour  in  Ireland 


Three-fourths. 
One-eighth. 


In  other  words,  the  last  two  classes,  which  constituted 
each  about  one-third  of  the  whole  manual  labour  class  of  the 
United  Kingdom  fifty  years  ago,  now  constitute  only  one- 
eighth  each,  and  the  remaining  highest  paid  class  which  was 
only  one-third  fifty  years  ago,  is  now  three-fourths  of  the 
whole.  Even  allowing  for  no  advance  at  all  in  the  averatre 
earnings  per  head  of  the  latter  class,  such  a  change  would 
involve  a  great  advance  in  the  mass.  I  propose  to  illustrate 
the  matter  practically  in  the  course  of  this  paper,  but  a 
hypothetical  illustration  may  be  useful.  Supposing  that  the 
wages  of  the  three  classes  were  respectively  £60,  £40,  and 
£20  fifty  years  ago,  and  that  the  wages  themselves  have  not 
risen  at  all  since  then,  we  should  get  the  following  average 
wages  fifty  years  ago  and  at  the  present  time,  in  consequence 
of  the  mere  change  in  the  composition  of  the  mass.  Dealing 
with  a  supposed  mass  of  GOO  labourers  in  each  case,  I  submit 
the  following  comparison  : — 


Fifty  Years  ago. 

Labourers. 

Present  Time. 

Labourers. 

Propor- 
tion. 

Wage. 

Total 
Earnings. 

Propor- 
tion. 

vv^o^o  '     Total 
Wage.    T- 

^       Earnings, 

200 
200 
200 

ird 
ird 
Jrd 

£ 
6o 
40 
20 

£ 

12,000 

8,000 

4,000 

450 
75 

75 

fths 

ith 

£              £ 
60       27,000 
40        3,000 
20         1,500 

6oo           — 

40 

24,000 

600 

— 

52^     31,500 

Average  improvement  about  33  per  cent. 

Thus,  without  any  increase  of  wages  at  all,  there  is  an 
p.normous  improvement  simply  because  the  population  at  the 


OF    THE   WORKING    CLASSES. 


42;{ 


higher  rate  of  wages  lias  increased  disproportionately  to  the 
others.  If  now  we  allow  for  an  improvement  of  50  per  cent, 
only  in  the  unit  of  each  class,  we  get  the  following  result : — 


Labourers. 

Fifty  Years  ago. 

Labourors. 

Present  Time. 

Propor- 
tion. 

«r               Total 
Wage,    r 

°       Earnings. 

Propor- 
tion. 

Wage. 

£ 
90 
60 
30 

Total 
Earnings. 

200 
200 
200 

ird 

H 

ird 

£      1        £ 
60       12,000 
40         8,000 
20         4,000 

450 

75 
75 

■;ths 

ith 
ith 

£ 

40,500 

4,500 

2,250 

600 

— 

40 

24,000 

600 

— 

78!! 

47,250 

Here  the  average  improvement  is  very  nearly  100  per 
cent.,  with  a  rise  of  only  50  per  cent,  per  head  in  the  wages 
of  each  class. 

It  is  this  element  in  the  question,  viz.,  the  change  in  the 
composition  of  the  mass  of  labourers,  which  appears  to  be 
altogether  overlooked  in  a  mere  comparison  of  the  wages  of  a 
given  employment  fifty  years  ago  and  at  the  present  time. 
When  such  comparisons  have  been  made  at  any  length  which 
may  be  thought  expedient,  a  still  broader  survey  of  the  facts 
must  be  made :  What  kinds  of  labour  have  increased,  and 
what  kinds  have  diminished,  become  most  important  con- 
siderations. For  this  reason,  among  others,  I  attempted  no 
exact  statement  of  averages  in  using  the  table  of  money 
wages  which  I  gave  in  my  former  paper.  The  general  run  of 
the  focts  appeared  to  be  more  interesting  and  instructive 
than  any  attempt  at  exact  percentages  of  increase  or  decrease, 
which  are  in  truth  impossible  in  such  an  inquiry,  though  the 
general  conclusions  may  themselves  l)e  beyond  iloubt.  Wliat 
I  have  said  may  show  that  even  an  improvement  of  only  50 


424  FURTHErv    NOTES    OX    THE    PROGRESS 

per  cent,  in  wages,  which  nobody  seems  to  question,  comparing 
given  employment  with  given  employment,  implies,  under  the 
actual  circumstances  of  a  change  in  tlie  composition  of  the 
working  population,  a  much  greater  improvement  on  the 
average  than  50  i)er  cent. 

A  third  fact  on  which  I  desire  to  lay  some  stress  in  a 
question  of  the  average  improvement  in'  money  wages,  is  the 
very  great  improvement  which  has  taken  place  in  the  w^ages 
of  the  lowest  class  of  labour.  The  tendency  of  the  economic 
changes  of  the  last  fifty  years  has  been  to  reduce  the  pro- 
portion of  this  description  of  labour  to  the  total  mass ;  its 
numbers  have  diminished  on  account  of  the  openings  for 
labour  in  other  directions ;  but  the  diminution  has  gone 
along  with  a  steady  improvement  in  the  condition  of  the 
most  unskilled  labourers  themselves. 

To  illustrate  this  point  I  have  printed  in  the  Appendix  (see 
Appendix  A.),  extracted  from  the  tables  of  revenue,  commerce, 
population,  &c.,  and  from  the  "Miscellaneous  Statistics  of 
the  United  Kingdom,"  particulars  of  the  wages  paid  to  the 
non-agricultural  labourers  fifty  years  ago  and  at  the  present 
time.  The  list  is  much  longer  for  the  present  time  than  for 
the  earlier  date,  but  some  items  fifty  years  ago  and  at  the 
present  time  can  be  compared.  Generally  the  effect  appears 
to  be  that  while  the  highest  class  of  unskilled  labour  or 
little  skilled  labour  of  a  non-agricultural  description  fifty  years 
ago  was  paid  about  15,s\  per  week,  the  corresjionding  figure  at 
the  present  time,  by  which  I  mean  of  course  about  two  or  three 
years  ago,  is  about  25s.  weekly.  Similarly  about  fifty  years 
ago  a  labourer's  common  wage  was  about  lis.  or  126".  weekly ; 
and  the  run  of  the  figures  now  is  al)out  17s.  or  18.s\  up  to  20,9. 
or  21s.  weekly.  The  wages  are  higher  in  London  and  some 
of  the  leading  manufacturing  towns  than  elsewhere,  but  com- 
paring like  with  like,  the  above  figures  seem  to  give  a  fair 


ON    THE    WORKING    CLASSES. 


42: 


idea  of  the  chanj^o  uliiuli  luis  occurred.  In  uther  words,  the 
improvement  is  from  70  to  90  per  cent,  in  the  money  wages  of 
unskilled  non-agricultural  laltuur.  Some  particulars  may  be 
stated  in  a  tal)ular  form  thus: 

Wages  of  Unskilled  LABomi  (Xon-Agricultural)  Fifty  Years 

AGO  AND  AT  THE  PRESENT  TiME. 

[Compiled  tVcni  the  particulars  in  Appenilix  A.] 


Fifty 

Increase. 

Present 

Time. 

1 

ago. 

Amount.  Per  Cent. 

s.     d. 

,s.      </. 

.s\    cf.  ! 

Labourers,  London     . 

15    - 

25    - 

10   - 

67 

„          Bradford  . 

15    - 

21    9 

6    9 

50 

Bricklayers'  labourers,  Manchester 

12    - 

22    - 

10    - 

83 

Spademen,  Mancliester(maximuin) 

15    - 

22    - 

7     - 

50 

Bricklayers'  labourers,  Glasgow  . 

9     - 

18    -* 

— 

— 

Stocking  makers,  Leicester. 

8     3 

14    -t 

5    9 

70 

Labourers,  Londonderry     . 

8     - 

IG    -X 

8     - 

100 

I  should  have  liked  to  give  a  longer  table,  but  substantially, 
keeping  in  mind  the  logic  of  the  facts,  even  a  short  table 
may  satisfy  us  of  the  magnitude  of  the  improvement  in  the 
wages  of  unskilled  labour.  It  will  not  fail  to  be  observed 
that  the  improvement  seems  to  be  greater  in  Glasgow  tlian 
in  the  more  southern  parts  of  the  country,  and  there 
is  a  similar  improvement  in  Ireland,  though  I  have  only 
been  able  to  give  a  Dublin  quotation  in  place  of  a 
quotation  from  Loiulondcrry  fifty  years  ago.  This  may 
remind  us  of  another  change  which  seems  to  have  been 
going  on  in  respect  of  wages.  There  has  been  equalisation 
in    given    employments     throughout    the    country.      Con- 


*  48  hours  weekly  at  ihf.  per  hour, 
t  Lowest  wage  quoted  for  Leicester. 


X  Dublin. 


426  FURTHER  NOTES  ON  THE  PROGRESS 

sequently  where  rates  were  relatively  lower  fifty  years  ago, 
there  has  been  more  advance  than  in  other  cases.  This  is  a 
fact  to  be  kept  in  mind  when  wages  in  a  particular  employ- 
ment in  a  given  place  seem  to  have  advanced  little.  In  the 
employment  itself  there  may  have  been  a  great  advance 
through  wages  in  the  lower  paid  places  advancing  to  the 
higher  level. 

A  similar  table  can  be  prepared  with  reference  to  agri- 
cultural labour.  I  have  placed  in  the  Appendix  (see 
Appendix  B.)  a  comparison  of  the  rates  of  wages  in  different 
counties  of  the  United  Kingdom  fifty  years  ago,  and  at  the 
date  of  the  recent  Eoyal  Commission  on  Agriculture;  the 
particulars  as  to  the  period  fifty  years  ago  being  extracted 
from  Mr.  Purdy's  two  papers  on  agricultural  wages,  read 
before  the  Statistical  Society  in  1861  and  1862,*  in  which 
he  made  use  of  published  and  unpublished  official  returns ; 
and  the  particulars  as  to  the  more  recent  period  being  con- 
densed from  the  reports  of  the  assistant  commissioners  to  the 
Eoyal  Commission  on  Agriculture.  The  general  effect  of  this 
table  is  that  while  the  rise  in  some  counties  in  England,  e.g., 
Kent,  is  little  more  than  one-third,  yet  there  are  many  counties, 
particularly  in  the  south  and  west,  and  "Wales,  in  which  the 
circumstances  were  very  distressing  fifty  years  ago,  where  the 
rise  is  50  per  cent,  and  upwards.  In  Wales  the  rise  would 
seem  to  be  about  100  per  cent.,  and  in  Scotland  and  Ireland 
there  is  nearly  as  great  an  improvement.  Altogetlier  the 
comparison  would  seem  to  confirm  very  fully  the  fact  of  an 
average  rise  of  60  per  cent,  which  Sir  James  Caird  has 
stated,  and  which  was  the  figure  I  made  use  of  in  my  former 
paper. 


*  See  Statistical  Society's  Journal,  vol.   xxiv.,   pp.  328-373,  and 
vol.  XXV.,  pp.  -125-490. 


OF    THE    WORKING    CLASSES.  427 

And  tlie  inference  from  these  figures  as  to  rude  labour, 
whether  agricultural  or  non-agricultural,  is  plain.  If  the 
rise  has  been  so  great  in  the  wages  of  a  large  class  of  labour 
at  the  very  bottom  of  the  scale,  Avhich  has  itself  been 
diminisliing  in  quantity  because  the  demand  has  been  nxore 
and  more  for  skilled  labour  of  some  kind,  then  we  may  be 
tolerably  certain  that  the  rise  in  skilled  labour  itself, 
man  for  man,  has  not  been  less,  while  the  improvement 
in  the  mass  must  be  greater  still  for  the  reason  already 
stated,  viz.,  that  the  proportion  of  skilled  labour  to  the 
whole  mass  has  increased  and  that  of  rude  labour  de- 
clined. 

In  connection  with  these  facts  I  may  also  refer,  without 
further  dwelling  on  it,  to  the  fact  mentioned  in  my  former 
paper,  that  the  number  of  income-tax  payers  lias  increased 
in  the  last  fifty  years  at  a  much  greater  rate  than 
the  increase  of  population.*  Mr.  Goschen,  in  his  recent 
address  at  Manchester  on  trade  depression,  has  cited  fresh 
figures  relating  to  the  last  ten  years  only,  entirely  confir- 
matory of  the  statement,  which  is  placed  altogether  beyond 
doubt.  It  is  difficult  to  suppose  that  at  the  bottom  of  the 
scale  rude  labour  has  improved  its  money  wage,  as  we  have 
seen,  and  that  at  the  top  of  the  scale  the  number  of  income- 
tax  payers  has  increased,  without  a  corresponding  average 
improvement  having  taken  place  all  through  the  inter- 
mediate mass. 

Altogether,  then,  the  incredulity  with  which  the  assertion 
of  an  average  increase  of  100  per  cent,  in  the  money  wages 
of  the  working  classes  in  the  last  fifty  years,  was  received 
in  some  quarters,  does  not  appear  to  have  any  justification. 


*  See  previous  Essay,  "  Progress  of  the  Working  Classes  in  tlic  last 
Half  Century,"  p.  398. 


428  FURTHER  KOTES  ON  THE  PROGRESS 

There  are  plenty  of  facts  which  are  well-known  and  even 
familiar  to  justify  the  assertion,  when  these  facts  are  them- 
selves studied  in  connection  with  the  changes  in  the  com- 
position of  the  mass  of  the  working  classes  which  have 
undoubtedly  occurred. 

Before  passing  from  this  point,  I  may  refer  briefly  to  one 
or  two  statements  which  have  api:)eared  since  I  delivered  my 
address,  and  which  throw  additional  light  on  the  subject. 
First  of  all  I  would  quote  a  letter  of  Mr,  Bright's,  giving  his 
own  experience  as  a  manufacturer,  wliich  cannot  but  be 
considered  a  valuable  piece  of  evidence,  Mr.  Bright  being 
one  of  those  whose  memory  goes  back  over  the  whole  period, 
and  who  is  able  to  check  the  dry  figures  which  may  be 
compiled  from  official  and  other  sources : 

"Let  your  workmen  reflect  on  the  change  in  their  condition 
wliich  free  trade  has  made  within  the  last  forty  years,  since  the 
reform  of  our  tariff.  The  Corn  Law  was  intended  to  keep  wheat 
at  the  price  of  80s.  the  quarter ;  it  is  now  under  40s.  the  quarter- 
The  price  of  tea  is  now  less  than  the  duty  which  was  paid  upon  it  in 
former  days.  Sugar  is  not  more  than  one-third  of  its  cost,  when  a 
monopoly  of  East  and  AYest  India  sugar  existed.  As  to  wages  in 
Lancashire  and  Yorkshire,  the  weekly  income  of  the  thousands  of 
workers  in  factories  is  nearly,  if  not  quite,  double  that  paid  before  the 
time  when  free  trade  was  established.  The  wages  of  domestic 
servants  in  the  county  from  which  I  come  are,  in  most  cases,  doubled 
since  that  time.  A  working  brick-setter  told  me  lately  that  his  wages 
are  now  7s.  (jd.  per  day  ;  formerly  he  worked  at  the  rate  of  4s.  per  day. 
Some  weeks  ago  I  asked  an  eminent  upholsterer  in  a  great  town  in 
Scotland  what  had  been  the  change  in  wages  in  his  trade?  Ho 
said  that  thirty  to  forty  years  ago  he  paid  a  cabinetmaker  12s.  per 
week ;  he  now  pays  him  28s.  per  week.  If  you  enquire  as  to  wages  of 
farm  labourers,  you  will  find  them  doubled  or  nearly  doubled  in  some 
counties,  and  generally  over  the  whole  country  advanced  more  than 
50  per  cent.,  or  one  half,  while  the  price  of  food  and  the  hours  of 
labour  have  diminished.  It  may  be  said  that  milk  and  butter  and 
meat  are  dear,  which  is  true,  but  these  are  dear  because  our  people 
by  thousands  of  families  eat  meat  who  formerly  rarely  tasted  it,  and 
because  our-inqwrts  of  these  articles  are  not  sufficient  to  keep  prices 


OF   THE   WORKING    CLASSES. 


429 


at  a  more  moderate  rate." — Extract  f rum  letter  from.  Mr.  J.  Brlijlit, 
M.P.,  to  Mr.  A.  Wilde.     ('  Timts;  I8th  November,  1884).  * 

The  next  figures  I  propose  to  ref(!r  to  -were  given  l)y  tlie 
President  of  the  Manchester  Statistical  Society,  Mr.  IMont- 
gomery,  in  his  very  interesting  address  on  19th  November, 
1884.  ]\Ir.  ]\Iontgomery  tells  us  that,  through  tlie  courtesy 
of  friends,  he  has  obtained  the  rates  of  wages  paid  indifferent 
mills  and  works  in  IManchester  and  neighbourliood  in  1834 
and  at  the  present  time.  Tliere  are  nine  spinning  mills  and 
live  weaving  mills  as  to  which  he  gives  details,  while  he  als(» 
gives  averages  for  calico-printing,  bleach  works,  dye  works, 
calendering  works,  mechanical  engineering,  glass  makers, 
]\Iacclesfield  silk  trade,  building  trades,  tailors  and  policemen, 
without  however  going  into  details  respecting  these  occupa- 
tions, as  in  the  case  of  the  spinning  and  weaving  mills.  As 
the  result,  Mr.  ]\Iontgomery  gives  the  following  general 
summary : — 


Percenta:;e 

of  increase. 

Spinning     . 

.     63 

AVeaving 

.     43 

Dyeing 

.     IG 

Calico-printing      . 

.     4G 

Calendering 

.     47 

Bleaching     . 

.     32 

Mechanical  engineering 

.     18 

Glass  making 

.     40 

Macclesfield  silk  trade  . 

.     37 

Building  trades    . 

.     4G 

Tailoring 

.     53 

Police. 

.     4G 

*  Mr.  Bright  has  since  elaborated  this  theme  in  one  of  his  election 
speeches  at  Birmingham,  but  the  above  a])ptars  sufficient  for  the 
lu'csent  purpose.  There  is  no  doubt  tluTC  are  many  specific  ca.ses  of 
an  improvement  of  100  per  cent.,  even  comparing  employment  with 
employment. 


430  FURTHER  NOTES  ON  THE  PROGRESS 

And  from  this  Mr.  Montgomery  concludes  that  the 
average  percentage  of  increase  for  all  trades,  1834-84,  is 
40j^5,  whicli  is  the  mean  of  the  percentages  in  the  summary  ; 
and  he  points  out  afterwards  that  this  percentage  is  lower 
than  the  figure  I  had  arrived  at.  From  what  I  have 
already  said,  you  will  understand  that  even  an  average  im- 
provement like  this  in  the  wages  of  manufacturing  labour  at 
Manchester,  would  imply  a  much  greater  improvement  on 
the  average  throughout  the  United  Kingdom.  But  Mr. 
Montgomery's  figures  in  detail,  if  I  may  be  allowed  a  remark 
by  way  of  criticism,  are  better  than  his  average.  His 
figures,  when  analysed,  do  not  tell  a  tale  substantially 
different  from  mine.  Looking  through  his  tables  I  find  that 
there  are  not  a  few  cases  of  increased  wages  of  100  per  cent, 
and  upwards  ;  tliat  in  other  cases  the  average  of  a  particular 
mill  or  a  particular  class  of  work  is  pulled  down  by  some 
specially  small  percentage  of  increase  {e.g.,  in  bleach  works 
there  is  a  class  called  "  stovers,"  whose  increase  of  wage  is 
only  3  per  cent.,  and  if  this  item  were  omitted,  the  increase 
in  bleach  works  on  the  average,  instead  of  being  32  per  cent, 
would  run  up  to  38  per  cent.) ;  and  that  but  for  these 
exceptions  to  the  general  run  of  the  figures,  the  average, 
even  on  the  plan  adopted  by  Mr.  Montgomery,  would  come 
out  much  higher  than  40^^  per  cent.  Keeping  in  mind 
what  I  have  already  said  as  to  the  probability  of  the  higher 
rates  of  increase  for  the  same  work  being  more  likely  to 
correspond  with  the  general  average  of  improvement  for  all 
work,  that  work  itself  clianging  greatly,  than  are  the  lower 
rates  of  increase,  the  data  M-hicli  Mr.  Montgomery  has 
supplied  appear  to  me  to  confirm  most  fully  the  conclusion 
that  there  is  an  improvement  all  round  in  given  employ- 
ments, at  any  rate  if  we  allow  for  the  shortening  of  hours  of 
labour,  closely  approaching  100  per  cent. 


OF    THE    WORKINO    CLAHSKS.  431 

Wliile  commenting  on  these  ligures  of  Mr.  Montgomery's, 
I  should  also  like  to  point  out  in  passing  tliat  tlie  mode  of 
arriving  at  an  average  which  he  employs  is  one  which  is 
somewhat  dangerous  in  an  investigation  of  the  present  kind, 
and  wliich  ought  not  to  he  made  use  of  without  grave 
reserves.  Thus  as  regards  spinning,  he  makes  an  average  of 
spinners,  piercers,  tenters,  and  winders  and  reelers  separately  ; 
then  adds  all  together  and  divides  by  four ;  wherel)y  lie 
arrives  at  an  average  of  63  ;  although  in  three  out  of  the 
four  classes  the  average  is  higher  than  this.  The  average  is 
brought  down  because  in  the  case  of  spinners  the  improve- 
ment is  only  3G  per  cent.  It  is  possible  that  on  account  of 
their  numbers  spinners  sliould  either  count  in  a  proper 
average  as  more  than  1  to  4,  or  less  than  that.  The  neglect 
of  relative  numbers  in  calculating  these  averages  is  ac- 
cordingly most  serious,  and  makes  the  wliole  i)rocess  in- 
correct. In  the  absence  of  any  knowledge  of  relative 
numbers,  a  good  deal  of  consideration  should  be  given  to  tlie 
run  of  the  figiires,  extremes,  whether  higli  or  low,  being 
looked  on  w^ith  some  suspicion,  and  especially  in  tliis 
question,  I  believe — for  the  reasons  I  have  already  stated — 
the  low  extremes.  Similarly,  in  the  final  summary  whicli 
I  liavc  quoted,  each  of  the  trades  named  is  treated  as  a 
single  and  equal  unit.  The  Macclesfield  silk  trade,  glass 
making,  mechanical  engineering,  and  dyeing,  giving  an 
average  increase  of  28  per  cent,  only,  are  treated  as  tlie 
equivalent  of  spinning,  weaving,  calico-printing,  and  calen- 
dering, giving  an  average  of  about  50  per  cent,  increase. 
The  average  in  each  particular  trade  is  thus  in  the  first 
instance  obtained  by  a  somewhat  douljtful  process,  and  then 
the  different  trades  are  combined  by  a  similar  process.  Not- 
withstanding, therefore,  the  percentage  which  Mr.  Mont- 
gomery arrives  at,  I  believe  it  is  iuqjossible  to  look  at  the 


4H2  FURTHER  NOTES  ON  THE  PROGRESS 

figures,  and  take  into  account  the  numerous  cases  of  large 
percentages  of  increase,  coupled  with  a  preponderance  of 
cases  at  rates  much  higher  than  his  average,  without 
coming  to  the  conclusion  that  he  underrates  the  real  average 
improvement  which  has  occurred. 

In  any  case,  I  need  hardly  say,  a  well-ascertained  increase 
of  over  40  per  cent.,  coupled  with  shortened  hours  of  labour, 
would  show  an  enormous  improvement  in  the  condition  of 
the  masses  of  the  community.  It  is  so  important,  however, 
that  data  such  as  Mr.  Llontgomery  has  collected,  should  be 
rightly  used,  that  I  hope  to  be  excused  for  insisting  so  much 
on  this  question  of  method,  and  not  merely  resting  satisfied 
with  the  broad  conclusion  that  there  is  an  improvement  of 
40  per  cent.  It  may  be  hoped  that  in  time  there  will  be 
many  similar  collections  of  figures,  and  in  this  view  the 
right  handling  of  them  will  be  of  great  importance.  It  need 
hardly  be  added,  after  what  I  have  already  said,  that  even  if 
a  right  average  could  be  obtained  for  particular  districts  such 
as  Manchester,  it  would  have  to  be  considered  how  far  each 
particular  district  represented  the  general  progress  of  the 
whole  community.  If  town  districts  like  those  of  Lanca- 
shire grow  at  a  faster  rate  than  rural  communities,  where 
wages  on  the  average  are  less  than  in  those  town  districts,  if 
England  itself  grows  in  population  at  a  greater  rate  than 
Scotland,  and  grows  while  Ireland  loses,  wages  in  England 
being  higher  than  in  Scotland  or  Ireland,  then  it  is  ex- 
ceedingly probable  that  the  percentage  increase  of  wages 
in  Manchester  and  neighbourhood  in  fifty  years  is  less  and 
not  more  than  the  average  of  tlie  whole  of  the  United 
Kingdom. 

Before  passing  from  these  Manchester  figures,  it  is  interest- 
ing to  notice,  I  think,  that  as  regards  Iniilders'  wages,  where 
Mr.  Montgomery  liappens  to  refer  to  the  same  items  as  are 


OP   THE    WOUKINO   CLASSES.  433 

referred  to  in  the  short  tal)le  contained  in  mj  former  address, 
the  iignres  used  l^y  Mr.  Montgomery  and  myself  are  very 
much  the  same,  tlumgli  drawn  from  different  sources.  Thus 
he  gives  brickhiyers'  wages  in  Manchester  fifty  years  ago 
as  23.9.  and  at  the  present  time  36s.,  the  corresponding  figures 
in  my  paper  being  24s.  and  36s.  Joiners  he  quotes  as  24.s-. 
and  36s.,  the  figures  in  my  paper  for  carpenters  being  24s.  and 
34s.  Masons  he  gives  as  27s.  and  32s.,  the  figures  in  my 
paper  being  27s.  and  29s.  lOd.  In  these  particular  cases, 
therefore,  the  details  given  by  Mr.  Montgomery,  while  agree- 
ing very  nearly  with  mine,  exhibit  on  the  whole  a  somewhat 
larger  advance.  So  far  as  these  figures  go,  therefore,  we 
may  infer  tliat  the  data  in  the  miscellaneous  statistics  are 
trustworthy,  and  above  all  do  not  exaggerate  the  improve- 
ment in  workmen's  money  wages  which  has  occurred. 

The  next  set  of  figures  to  which  I  propose  to  make  a  brief 
reference  are  those  Mdiich  Mr.  Leone  Levi  published  about  a 
year  ago.  You  will  recollect  that  in  my  former  paper  I 
referred  to  the  desirability  of  a  continuation  of  the  work 
which  our  colleague  aecomplislied  in  1867,  and  I  may  con- 
gratulate him  therefore  on  his  having  been  able  to  do  so. 
"We  have  now  accordingly  for  two  dates,  1867  and  the 
present  time,  a  statement  of  the  average  earnings  of  the 
working  classes  of  the  community,  made  up  so  as  to  show 
the  aggregate  earnings  of  each  class  and  of  all  workmen 
together,  and  so  as  to  show,  therefore,  an  average  per  head. 
The  period  covered  is  of  course  too  short  to  enter  into  the 
jiresent  comparison,  but  so  far  as  the  figures  go  they  are 
confirmatory  of  the  general  conclusion.  In  the  seventeen 
years  1867-84  Professor  Levi  finds  that  the  aggregate  earn- 
ings of  the  working  classes  have  risen  from  418  million  to 
520  million  pounds,  or  nearly  25  per  cent.,  the  increase  of 
the   numbers   being   only    11    per   cent.;    and    the   average 

II.  2   F 


434  FURTHER  NOTES  ON  THE  PROGRESS 

increase  per  head  is  from  £38  to  £42  14s.,  or  rather  more 
than  11  per  cent. 

Allowing  that  probahly  since  1873  there  has  been  little 
increase  in  the  money  -wages  of  working  men,  hut  in  some 
cases  there  has  been  a  decrease,  so  that  the  improvement 
since  1867  only  includes  altogether  a  short  period  in  which 
improvement  could  take  place,  the  fact  that  there  is  never- 
theless an  improvement  of  11  per  cent,  all  round,  not 
counting  the  shortening  of  the  hours  of  labour,  is  con- 
firmatory as  far  as  it  goes  of  an  enormously  greater  improve- 
ment in  the  whole  period  from  fifty  years  ago  to  the  present 
time.  Part  of  my  former  case  was  that  although  the  cases 
were  comparatively  few  in  number  in  which  the  miscel- 
laneous statistics  enabled  us  to  go  back  fifty  years,  yet  in 
detail  shorter  periods  could  be  compared  more  fully,  and  in 
each  shorter  period  a  considerable  increase  was  to  be  traced. 
I  should  have  expected  beforehand,  even  in  the  period  men- 
tioned by  him,  rather  a  larger  increase  than  Professor  Levi 
brings  out,  but  the  increase  in  the  short  period  he  mentions 
is  certainly  quite  sufficient  to  confirm  the  former  statement 
as  to  the  effect  of  the  wages  returns  in  the  miscellaneous 
statistics. 

It  only  remains  to  notice  briefly  what  the  improvement  in 
wages  abroad  has  been  in  a  corresponding  period.  The  fact 
of  such  an  improvement  would  of  course  tend  to  confirm  the 
evidence  of  improvement  at  home,  showing  it  to  be  in  no 
way  an  isolated  fact,  but  part  of  a  wider  improvement. 
This  question,  however,  was  dealt  with  so  ably  by  Mr.  Jeans 
in  the  paper  he  read  in  December,  1884,  that  I  need  only 
glance  at  it.  I  desire  mainly  to  refer  those  of  you  who  are 
interested  in  this  matter  to  two  works  which  have  recently 
appeared,  giving  a  great  deal  of  information  on  this  head. 
The  first  of  these  works  is  that  of  M.  Yves  Guyot,  '  Principles 


OF    THK    WOUKINO    CLASSES.  4o5 

of  Social  Economy,'  of  which  there  is  now  an  Englisli  transla- 
tion (London :  W.  Swan,  Sonnenschein,  and  Co.).  I  extract 
from  this  work,  and  place  in  the  Appendix  (see  Appendix  C), 
two  tables  as  to  Wdrknien's  and  workwttnien's  wages  in 
France  early  in  the  century,  and  at  the  present  time,  showing 
that  in  the  case  of  workmen  in  the  building  trades  the  rise 
is  in  many  cases  from  G9  to  105  per  cent.,  and  in  others 
from  41  to  75  per  cent.,  Mitli  the  one  exception  of  an  increase 
of  20  ])er  cent,  only ;  while  in  the  case  of  the  workwomen 
the  increase  is  over  100  per  cent,  in  seven  out  of  nine  cases 
given,  and  on  the  average  is  9-4  per  cent.  These  figures  fully 
confirm  the  official  French  figures  given  by  Mr.  Jeans, 
showing  an  average  improvement  all  over  France  between 
1853  and  the  present  time.  Similarly  M.  Yves  Guyot  gives 
various  figures  showing  progress  in  Germany,  principally  in 
Alsace.  I  have  extracted  two  of  these  tal)les  in  the  Appendix  : 
the  first,  showing  rates  of  increase  at  Mulhouse  ranging 
between  60  and  256  per  cent,  since  1835,  being  particularly 
striking.  The  second  book  I  refer  to  is  that  of  Mr.  Lowthian 
Bell,  on  '  The  IManufacture  of  Iron  and  Steel '  (London  : 
George  Koutledge  and  Sons),  in  which,  while  comparing 
English  and  foreign  wages  at  the  present  time,  he  states 
incidentally  not  a  few  facts  as  to  the  increase  of  foreign 
wages.  The  cases  of  increase  are  not  uniform,  Mr.  Bell  as  a 
rule  not  going  back  much  before  1869,  but  there  is  evidence 
of  a  considerable  increase  since  that  time.  For  instance,  in 
an  establishment  on  the  Rhine,  consisting  of  blast  furnaces, 
foundry,  and  engineering  shops,  the  average  yearly  earnings 
of  the  whole  establishment  per  man  were  £31  7s.  in  1869, 
and  in  1878,  £40  12s.  per  man,  having  been  in  1873  as  liigh 
as  £52  16.s\  per  man.  I  must  refer  you,  however,  to  the 
book  itself;  it  would  l.)e  unfair  ti)  quote  at  any  greater 
length. 

2  F  2 


436  FURTHER  NOTES  ON  THE  PROGRESS 

Both  the  gentlemen  I  am  quoting  note  that  the  increase  in 
wages  which  has  taken  place  is  very  largely  in  the  lower 
kinds  of  labour,  or  in  districts  where  wages  were  previously 
low.  M.  Yves  Guyot  dwells  particularly  on  the  fact  of  tlie 
improvement  in  women's  wages.  Such  facts  are  of  real 
importance  in  the  question,  and  go  far  to  confirm  what  I 
have  already  urged  as  to  attaching  special  weight  to  the 
cases  of  a  maximum  increase  of  wages.  If  the  wages  of 
labourers  at  the  bottom  of  the  scale  have  increased  at  a 
greater  rate  than  others,  this  would  imply  a  very  large 
aggregate  improvement  indeed,  on  account  of  the  great  mass 
of  the  labourers  at  the  bottom  of  the  scale. 

Summing  up  this  part  of  the  argument  to-night,  what  I 
have  to  urge  is  that  not  only  is  an  increase  of  money  wages 
in  the  last  fifty  years  clearly  ascertained,  as  well  as  the 
probability  that  this  increase  cannot  be  less  in  almost  any 
case  than  50  per  cent. ;  but  it  is  also  evident  that  the  in- 
crease in  very  many  cases  is  at  a  much  higher  rate,  while  it  is 
antecedently  probable  that  the  increase  of  the  higher  rates, 
where  it  is  possible  to  compare  wages  with  the  same  work, 
indicates  more  closely  the  general  average  increase  than  does 
the  increase  at  the  lower  rates.  Then  we  find  that  the 
changes  in  the  composition  of  the  mass  of  the  people,  consist- 
ing in  an  increase  of  artisan  and  skilled  labour  in  enormous 
proportion,  wliile  the  proportion  of  rude  and  unskilled  labour 
has  enormously  declined,  are  such  as  to  imply  a  greater 
average  improvement  in  the  whole  mass  than  if  we  merely 
compared  one  specific  employment  with  another.  We  find 
also  that  at  different  intervals  during  the  fifty  years  improve- 
ments have  occurred  corroborating  the  inference  of  a  great 
improvement  which  is  drawn  from  a  review  of  the  whole 
period.  Finally,  there  is  an  improvement  abroad  which 
quite   corresponds  to  the  improvement  at  home.     That  the 


OF    THE    WORKING    CLASSES.  -lo? 

^logi-ce  of  iin])rovemeut  in  iiiouey  \vaf,'es  in  the  last  lifty 
years  is  accordingly  very  considerable,  not  far  short  of  100 
per  cent.,  and  probably  exceeding  that  figure,  if  we  compare 
strictly  tlie  whole  mass  witli  the  whole  mass,  appears  to  be 
in  this  way  fairly  establishetl 

It  follows  consequently  that  if  prices  have  not  risen  as 
compared  with  what  they  were  fifty  years  ago,  but  have 
rather  declined,  as  I  believe  tliem  to  have  done,  the  only 
exceptions  l)eing  rent  and  "  meat,"  wliicli  I  dealt  witli  in  my 
former  paper,  then  the  vast  improvement  wliicli  1  described 
in  the  condition  of  the  working  classes  has  undoubtedly 
occurred.  They  have  at  least  had  the  means,  whether  they 
have  used  them  wisely  or  not.  On  this  head,  I  may  remark, 
there  is  also  practically  no  question  raised,  the  onl}-  challenge 
I  know  of  being  that  of  Mr.  Hutchinson  already  referred  to. 
Mr.  Hutchinson  indeed  gives  a  list  of  prices  from  the  file  of 
the  'Leeds  Mercury'  in  1835  and  1884,  of  a  very  curious 
description ;  but  the  list  does  not  include  clotliing,  while  as 
to  flour  he  admits  himself  that  the  average  fiicts  fifty  years 
ago  and  at  the  present  time  do  not  correspond  to  the  indica- 
tion of  the  table.  He  might  have  said  the  same  of  potatoes 
and  one  ( )r  two  other  articles,  including  bacon,  wliich  has  .un- 
doubtedly not  risen  in  price  on  the  average,  and  comparing 
period  with  period,  as  he  represents  it.  The  facts  remain 
undisputed  that  as  regards  bread  stuffs,  clothing,  tropical 
produce,  and  miscellaneous  articles  of  every  sort,  prices 
range  lower  at  present  than  they  did  fifty  years  ago.  Per 
contra  there  has  been  an  advance  in  meat,  except  bacon ;  liut 
with  this  exception  mainly,  the  changes  of  prices  in  the  last 
fifty  years  have  benefited  the  workman.  A  sovereign  goes 
farther  than  it  did.  As  to  meat,  I  shall  have  something  to 
say  later  on  as  to  its  not  concerning  the  workman  fifty  years 
ago  as  it  has  since  done,  the  rise  in  price  being  in  fact  due  to 


438  FURTHER    NOTES    ON    THE    PROGRESS 

tlie  increased  consumption  of  meat  by  the  masses.  But 
allowing  for  the  fall  in  other  articles,  it  may  well  be  doubted 
whether  the  advance  in  meat,  admitting  it  to  have  been  an 
article  of  general  consumption  fifty  years  ago,  is  not  fully 
compensated. 


///.  THE  POSITION  FIFTY  YEARS  AGO. 

To  bring  out  more  fully  the  degree  of  improvement  which 
has  occurred,  I  have  thought  it  might  be  useful  to  make 
various  extracts  from  the  literature  and  Blue-books  of  fifty 
years  ago,  showing  how  workmen  lived,  and  how  differently 
the  condition  of  the  working  classes  was  then  spoken  of 
from  what  would  now  be  the  lanorua2:e  used. 

I  may  refer  first  of  all  generally  to  Carlyle's  'Sartor 
Eesartus,'  and  '  Past  and  Present,'  as  containing  in  an 
extreme  form  the  pessimistic  view  of  the  condition  of 
England  question.  Carlyle's  theme  constantly  was  that 
thousands  and  millions  were  starving  and  j^ermanently 
under-fed,  in  fact  in  the  most  hopeless  condition.  Thus  in 
'  Past  and  Present,'  p.  234,  he  speaks  of  "  two  million  shirt- 
less or  ill-shirted  workmen  sitting  enchanted  in  workmen's 
bastilles,  and  five  million  more  (according  to  some)  in 
Ugolino  hunger  cellars."  Some  of  you  also  may  perhaps 
remember  the  description  in  '  Sartor  Eesartus '  of  "  potatoes 
and  point "  as  the  diet  of  the  Irish  peasant.  Carlyle  con- 
stantly spoke  of  the  situation  as  so  terrible  and  hopeless, 
that  even  the  abolition  of  the  insane  Corn  Laws  would  only 
give  from  ten  to  twenty  years  of  new  possibility. 

Similarly  there  are  some  curious  passages  in  Mr.  Disraeli's 
'  Sybil.'  I  shall  give  only  one  or  two  extracts.  The  first  is 
a  description  of  the  workman's  home :  the  point  here  being 


OF    THE    WORKING    CLA8SE«.  439 

tliat  the  homo  spoken  of  is  tliat  of  the  ordinary  liritish 
peasant,  and  not  merely  of  the  "  outcast,"  of  ^Yllom  we  have 
heard  so  much  lately  : — 

"To  that  home,  over  which  niftlaria  hovered,  and  round  whose 
sliivering  hearth  were  clustered  oilier  guests  besides  the  exhausted 
family  of  toil,  Fever,  in  every  form,  pale  Consumption,  exhausting 
Synochus,  and  trembling  Ague,  returned,  after  cultivating  the  broad 
fields  of  merry  England,  the  bold  British  peasant,  returned  to 
encounter  the  worst  of  diseases,  with  a  frame  the  least  qualified  to 
oppose  them ;  a  frame  that,  subdued  by  toil,  was  never  sustained  by 
animal  food  ;  drenched  by  the  temi)est,  could  not  change  its  drijjping 
rags;  and  was  indebted  for  its  scanty  fuel  to  the  windfall  of  the 
woods."—'  Sybil,'  p.  49. 

Then  we  have  a  dialogue  like  the  following,  on  the  rate  of 
wages  : — 

" '  And  what  is  the  rate  of  wages  in  your  part  of  the  world,  Lord 
Marney  ? '  inquired  Mr.  St.  Lys,  who  was  standing  by. 

" '  Oh,  good  enough  ;  not  like  your  manufacturing  districts :  but 
IJeoplo  who  work  in  the  open  air  instead  of  a  furnace,  can't  expect  and 
don't  require  such.    They  get  their  8.s.  a-week,  at  least  generally.' 

" '  Eight  shillings  a-week,'  said  ]\Ir.  St.  Lys.  '  Can  a  labouring  man 
with  a  family  perhaps  of  eight  children  live  on  Ss.  a-week  ?  ' 

" '  Oh,  as  for  that,'  said  Lord  Marney,  '  they  get  more  than  that, 
because  there  is  beer  money  allowed,  at  least  to  a  great  extent 
among  us,  though  I  for  one  do  not  approve  of  the  practice,  and 
that  makes  nearly  Is.  per  week  additional,  and  then  some  of  them 
have  potato  grounds,  though  I  am  entirely  opposed  to  that  system.' 

" '  And  yet,'  said  Mr.  St.  Lys, '  how  they  contrive  to  live  is  to  me 
marvellous.' 

" '  Oh,  as  for  that,'  said  Lord  Marney, '  I  have  generally  found  the 
higher  the  wages  the  worse  the  workman.  They  only  spend  the 
money  in  the  beer  shops.    Tfiey  are  the  cur.se  of  this  country.' " — P.  95. 

Then   we  have  pictures  like   that   of  600,000   handlooni 

weavers  mined  by  machinery,  and  earning  wages  of  1(/.  per 

hour,  and  a  discussion  on  the  increase  of  population,  which  I 

venture  to  quote  : — 

"♦I  speak  of  the  annual  arrival  of  more  than  300,000  strangers  in 
this  island.  How  will  you  feed  them?  How  will  you  clothe  them? 
How  will  you  house  them  ?     They  have  given  up  butchers'  meat ; 


440  rURTHER    NOTES    ON    THE   PROGRESS 

must  they  give  up  bread  ?     And  as  for  raiment  and  shelter,  the  rag 
of  the  kingdom  are  exhausted,  and  your  sinks  and  cellars  already 
swarm  like  rabbit  warrens.' 

" '  'Tis  an  awful  consideration,'  said  Egremont,  musing. 

"'Awful,'  said  Gerard,  'it  is  the  most  solemn  thing  since  the 
Deluge.  "What  kingdom  can  stand  against  it?  Why,  go  to  your 
history — you're  a  scholar,  and  see  the  fall  of  the  great  Eoman 
Empire — what  was  that?  Every  now  and  then  there  came  two  or 
three  hundred  thousand  strangers  out  of  the  forests,  and  crossed  the 
mountains  and  rivers.  They  come  to  us  every  year,  and  in 
greater  numbers.  What  are  your  invasions  of  the  barbarous  nations, 
your  Goths  and  Visigoths,  your  Lombards  and  Huns  to  our  population 
returns.'  "—P.  120. 

Even  more  striking  to  me,  however,  because  having  a  ring 
of  most  intimate  acquaintanceship  with  the  people  described, 
are  the  descriptions  in  'Mary  Barton.'  I  could  hardly 
imagine  any  of  the  artisans  in  the  cotton  trade  at  the  present 
time  using  the  following  language  which  the  authoress  puts 
into  the  mouth  of  Barton  : — 

"'If  I  am  out  of 'work  for  weeks  in  the  bad  times,  and  winter 
comes,  with  black  frost,  and  keen  east  wind,  and  there  is  no  coal 
for  the  grate,  and  no  clothes  for  the  bed,  and  the  thin  bones  are 
seen  through  the  ragged  clothes,  does  the  rich  man  share  his  plenty 
with  me  as  he  ought  to  do,  if  his  religion  wasn't  a  humbug  ? '  "—P.  G. 

Both  as  to  the  description  of  probabilities  of  distress  and 
the  disposition  of  the  richer  classes  the  picture  would  now  be 
untrue.  Then  we  have  such  a  description  as  that  of  the 
Oldham  weaver : — 

"  Oi'm  a  poor  cotton-weyver,  as  mony  a  one  knoowas, 
Oi've  nowt  for  t'  yeat,  an'  oi've  worn  eawt  my  clooas, 
Yo'ad  hardly  gi'  tuppence  for  aw  as  oi've  on. 
My  clogs  are  both  brosten,  an'  stuckings  oi've  none, 

Yo'd  think  it  wur  hard, 

To  be  brought  into  th'  warld. 
To  be—'  clemmed,'  *  an'  do  th'  best  as  yo  con."  f 


*  tf 


'  Clem,"  to  starve  with  hunger.    "  Hard  is  the  choice,  when  the 
valiant  must  eat  their  arms  or  rlem." — Ben  Jonson. 
t  '  Mary  Barton,'  chcaj)  edition,  p.  26. 


OF    TJIE    AVOKKING    CLASSES.  441 

I  do  not  propose,  liowever,  to  weary  you  with  extracts. 
What  I  am  anxious  to  impress  is  that  these  are  descriptions 
intended  to  apply  to  large  masses  of  workmen  in  the  leading 
industries  of  the  country,  with  whom  had  tiiucs  were  familiar, 
and  who  in  the  hest  of  times  never  attained  tlie  prosperity  of 
our  present  artisan  classes. 

If  we  turn  to  the  Blue-hooks,  we  find  ample  facts  telling 
their  own  tale,  and  I  give  on  p.  44:^  a  list  of  sudi  lUue- hooks 
which  I  have  looked  into,  and  which  I  would  connnend  to 
tlie  perusal  of  those  who  are  inclined  to  dispute  that  the 
condition  of  the  workman  of  this  country  fifty  years  ago  was 
so  different  from  what  it  is  now,  that  when  we  read  it  we 
appear  to  be  reading  of  a  dilfercnt  world.  I  may  refer  tliem, 
moreover,  to  a  book  written  forty  years  ago  by  ^h\  W.  T. 
Thornton,  whose  name  many  will  recognise  as  that  of  a  very 
able  economist,  and  whose  abilities  I  have  admired,  though 
on  many  points  I  have  differed  from  him.  His  subject  is 
*  Over  Population  and  its  liemedy,'  and  the  second  and  third 
chapters  of  this  book  are  practically  a  summary  of  the  Blue- 
books  referred  to.  After  speaking  of  the  agricultural  labourers 
of  Lincolnshire  and  Ifutland,  and  of  Cumberland  and  "West- 
moreland as  forming  the  happiest  portion  of  the  English 
peasantry,  although  "  such  labourers  as  are  entirely  dependent 
on  wages,  although  they  may  be  secure  from  want,  can 
scarcely  be  said  to  know  anything  of  comfort,"*  Mr.  Tliorn- 
ton  goes  on  to  describe  the  mass  of  agricultural  lal tourers  in 
very  different  terms.  This  is  his  description  of  the  Dorset- 
shire labourer : — 

"lu  general  a  field  Ial>oiu'cr  cannot  one  week  with  another  cam 
more  than  8s.  Alwoman  may  earn  6(/.,  Sc/.,  or  Is.  a  day,  according 
to  the  season,  but  the  emjiloyment  of  women  in  agriculture  is  not 
continuous,  and  it  is  supposed  that  the  earnings  of  a  cottager's  wife 

*  '  Over  Population  and  its  Remedy,'  p.  19. 


442 


FURTHER    NOTES    ON    THE    PROGRESS 


List  of  Parliamentary  Beports,  &c.,  dealing  with  the  Con- 
dition OF  THE  Working  Classes  Fifty  Years  ago. 


Publications. 


Report  from  Committee  on 
Manufactures,  &c.,  1833,  vol. 
vi. 

Eeport  from  Commissioners  of 
Poor  Laws,  1834,  vol.  xxxix. 


Eeport  from  Commissioners  of 
Poor  Laws,  Part  I.,   183i, 

vol.  XXX. 

Eeports  from  Committees,  II., 

1810. 
Eeports  from  Committees  on 

Emigration,  1826-27. 
Eeports  from  Commission  on 

Factories,  1833,  vol.  xx. 


Subject. 


Eeports  from  Committees  on 
Poor  Laws  (12,  Part  I.), 
1837-38,  vol.  xviii. 

Eeports  from  Committees,  1830, 

vol.  X. 
First  Eeport  from  Committee 

on    Agriculture,   1836,  vol. 

xiii.  Part  I. 
Eeport    from    Committee   on 

Agriculture,  1836,  vol.  xiii. 

Part  II. 
Pteport    from    Committee    on 

Agriculture,  1837,  vol.  v. 


Statement  of  weekly  earnings  and  food 
for  family  of  six  persons. 

Summary  table  of  answers  to  Q.  14. — 
"  Could  a  family  subsist  on  their 
earnings,  and  on  what  food  ?  " 

List  of  persons  from  whom  communi- 
cations have  been  received  as  to 
wages  and  subsistence  of  foreign 
labourers. 

Answers  relating  to  county  of  Berks. 

Kent. 

Committee  on  Petition  of  Weavers. 

Wages  (highest  and  lowest)  and  food 
of  operative  weavers. 

Earnings  and  living.  Statement  of, 
of  framework  knitters  (stocking 
makers). 

Families  annually  relieved  at  Stock- 
port. 

Wages  of  female  labour  in  cotton 
mills  at  Manchester. 

AVeekly  earnings  of  males  and  females 
in  forty-three  cotton  mills  in  Man- 
chester. 

Average  weekly  and  annual  income 
of  a  family  of  six  persons. 

Average  annual  income  of  agricultural 
labourers. 

Manufacturers'  employment.  Weekly 
earnings  of  working  classes. 

Agriculture. 


OF    THE    WORKING    CLASSES.  443 

throughout  the  year  do  not  much  exceed  50s.  A  man  and  his  wife 
may  tlicreforc  earn  9s.  a  week,  or  £23  Hs.  a  year,  to  provide  for  three 
and  a  quarter  persons  on  an  uveraf^c.  Fifty  shillings  go  for  rent,  30s. 
for  fuel,  30.S.  more  for  soap  and  candles,  and  £5  for  clothes,  leaving 
£12  IBs.  a  year,  or  about  8^'/.  a  day  to  buy  food  for  the  family,  that  is 
to  say,  a  fraction  more  than  2i'/.  a  head  daily.  Taking  the  average 
price  of  such  bread  as  is  used  by  the  peasantry  in  the  West  of  England 
to  l>e  Is.  the  gallon  loaf  of  8  lbs.  11  oz.,  and  that  of  potatoes  to  bo 
Is.  2(/.  i^er  bushel  of  55  lbs.,  2hl.  will  purchase  about  29  oz.  of  l)read,  or 
10  lbs.  of  potatoes.  In  Ireland,  where  the  character  of  the  potato  may 
be  presumed  to  be  best  understood,  5  lbs.  are  considered  no  more  than 
a  sufficient  meal  for  a  labouring  man ;  but  it  appears  that  two  of  such 
meals  a  day  are  as  much  as  the  Dorsetshire  labourer  can  venture  to 
indulge  in.  It  must  be  borne  in  mind  that  these  calculations  are  not 
intended  to  represent  the  actual  condition  of  the  Dorsetshire  labourer, 
liut  rather  to  show  what  it  would  be  if  every  able-bodied  man  had  to 
maintain  an  equal  proportion  of  the  helpless  members  of  the  com- 
munity. Most  of  the  aged  and  orphan  poor  are  maintained  by  the 
parish,  but  it  must  not  on  that  account  be  supposed  that  the  average 
number  of  persons  for  whom  an  agricultural  labourer  has  to  provide 
is  less  than  one  and  a  quarter,  or  that  person's  share  of  the  daily  8'/. 
wortli  of  food  is  proportionally  greater.  IMarriages  take  ]ilacu  both 
much  more  frequently  and  much  earlier  among  labourers  than  among 
people  of  higher  rank,  and  their  families  are  consciiuently  larger  than 
the  average.  Certainly  the  real  condition  of  the  Dorsetshire  peasantry 
is  very  little,  if  at  all,  superior  to  the  description  given  above.  Bread 
and  potatoes  [do  really  form  the  staple  of  their  food.  As  for  meat, 
most  of  them  would  not  know  its  taste,  if  once  or  twice  in  the  course 
of  their  lives— on  the  squire's  having  a  son  and  heir  born  to  him,  or  on 
the  young  gentleman's  coming  of  age — they  were  not  regaled  with  a 
dinner  of  what  the  newspapers  call  '  old  l^nglish  faro.'  Some  of  them 
contrive  to  have  a  little  bacon  in  the  proportion,  it  seems,  of  half  a 
pound  a  week  to  a  dozen  persons,  but  they  more  commonly  use  fat  ti> 
give  the  potatoes  a  relish,  and  as  one  of  them  told  Mr.  Austin,  they 
don't  always  go  '  without  cheese.'  "* 

In  AViltshire  and  Somersetshire  Mr.  Thuruton  goes  on  ti» 
say  that  matters  are  still  worse  with  the  labourer,  wliose 
food  is  bread  and  potatoes,  as  in  Dorsetshire,  but  with  a 
larger  proportion  of  potatoes  and  a  smaller  of  bread.  "Wages 
in  Somersetshire,  he  states,  are  sometimes  as  low  as  6.s-.  a 

*  '  Over  Population  and  its  Eemedy,'  pp.  20-22. 


444  FURTHER    NOTES    ON    THE    PROGRESS 

week,  with  an  allowance  of  cyder,  estimated  to  be  worth 
Is.  Sd.  a  week.  The  range  of  the  labourer's  condition  through- 
out England  was  between  this  low  extreme  and  the  condition 
of  things  in  Lincolnshire  already  referred  to.  As  regards 
Xorfolk  and  Suffolk,  where  the  condition  was  supposed  to  be 
above  the  average,  he  states,  referring  to  a  recent  period  of 
low  prices  of  agricultural  produce  and  distress  :  "  Even  when 
employment  was  abundant,  and  while  wages  remained  at  the 
old  rate  of  10s.  a  week,  the  peasantry  of  these  two  counties 
seldom  tasted  anything  better  than  dry  bread ;  so  that  when 
employment  was  only  to  be  had  every  other  day,  and  the  rate 
of  wages  fell  to  7s.  or  Ss.  a  week,  their  situation  became 
truly  deplorable."  We  are  justified  then  in  describing  the 
general  condition  of  the  agricultural  labourer  in  England  as 
deplorable  in  the  extreme,  his  average  wages  being  only  lO.s-. 
a  week  even  in  good  times,  and  many  being  far  below  that 
average ;  while  the  happier  but  smaller  portion  in  Lincoln- 
shire and  the  northern  counties  of  England  had  little  more 
than  a  sufficiency  of  plain  food,  and  no  surplus. 

So  much  for  agricultural  labour  in  England.  As  regards 
the  Welsh  labourers,  Mr.  Thornton  states  : — 

"  The  Eebecca  riots  that  took  place  in  South  Wales,  in  the  summer 
of  1843,  drew  a  large  share  of  public  attention  to  the  state  of  the  in- 
habitants of  that  quarter,  where  the  peasantry  seem  to  be  worse  oflf 
than  in  the  worst  parts  of  England.  Seven  shillings  a  week — the 
minimum  of  English  agricultural  wages — are  there  the  maximum,  and 
are  obtained  only  by  labourers  in  the  employment  of  landowners  and 
gentlemen  farmers.  Male  labourers  commonly  have  their  cottages 
rent  free.  Most  of  the  farms,  however,  are  small,  not  extending  be- 
yond 100  acres,  and  the  poorer  farmers  pay  their  men  only  8d.,  9'/., 
or  at  most  l.s.,  a  day,  or  Gd.  or  Hd.  a  day  with  food,  if,  as  is  often  the 
case,  the  men  board  with  their  masters.  Coarse  barley  bread, 
flummery,  and  potatoes,  are  almost  their  sole  food,  and  many  of  the 
small  farmers  themselves  have  little  else  except  milk,  cheese  and 
bacon.    They  seldom  taste  any  other  animal  food."* 


Over  Population  and  its  Remedy/  pp.  26  and  27. 


OF    THE    WOliKING    CLASSES.  4-15 

It  must  always  l>e  ri3ineml)ere(l  that  in  these  discussions 
we  are  not  speakin^i,'  of  En<,'land  merely,  but  of  the  whole 
United  Kingdom,  which  must  all  be  taken  into  account,  even 
ifAvewere  dealing  with  England  only,  because  the  Englisli 
labour  market  lias  itself  been  largely  recruited  in  the  last 
fifty  years  from  other  parts  of  the  United  Kingdom.  Of  course 
the  labourers  in  Scotland  and  Iceland  were  not  to  be  com- 
pared with  those  of  England  fifty  years  ago,  poor  as  tlie  latter 
were.  As  regards  Scotland,  Mr.  Thornton's  statement,  p.  41 , 
is  explicit,  that  the  diet  of  the  agricultural  labourers,  whether 
in  the  bothy  or  the  farm  house,  consists  principally  of  meal, 
potatoes,  fish,  milk,  cheese,  and  butter,  but  they  are 
occasionally  treated  with  butcher's  meat.  This  statement, 
as  far  as  a  certain  part  of  the  Lowlands  is  concerned,  I  can 
fully  confirm  from  my  own  personal  recollection.  And 
beyond  food  there  were  no  large  payments]  in  money.  The 
condition  of  things  was  not  intolerable,  tlie  plain  living 
being  accompanied  by  a  good  deal  of  culture  and  high 
thinking,  but  in  material  resources  the  Scotch  peasant  was 
certainly  not  better  than  the  average  agricultural  labourer  in 
England.  In  Scotland,  however,  there  was  a  lower  deep,  the 
misery  in  the  Highlands,  and  especially  in  the  West 
Highlands  and  islands,  being  pitiable  in  the  extreme, 
thousands  upon  thousands  being  undoubtedly  in  a  state  of 
semi-starvation. 

As  regards  Ireland,  I  need  not  harrow  you  with  details  of 
the  melancholy  condition  of  tilings  even  before  the  potato 
famine.  In  Ulster  the  food  of  the  peasantry,  where  the 
wages  were  about  Is.  a  day,  is  described  as  consisting  of 
meal,  potatoes,  and  milk;  in  the  southern  districts  of 
potatoes  and  milk  without  meal,  the  money  wages  being  8^/. 
a  day ;  and  in  the  western  districts,  of  the  potato  alone, 
without  meal,  and  in  most  cases  without  milk,  the  money 


446  FURTHER  NOTES  ON  THE  PROGRESS 

wages  on  the  average  being  not  more  than  M.  per  day.  The 
want  of  employment  of  any  kind  at  any  wage,  the  semi- 
starvation,  the  want  of  clothing  and  shelter  accompanying 
this  state  of  things,  need  not  be  described  in  detail.  I  may 
refer  you  to  the  book  itself.*  What  I  am  anxious  to  bring 
out  now  is  that  the  descriptions  apply  to  one-third  of  the 
labouring  population  of  the  United  Kingdom  of  fifty  years 
ago.  'Wliatever  may  be  the  state  of  things  in  Ireland  now — 
and  they  have  certainly  improved  to  an  enormous  extent  in 
the  last  half  century — my  present  point  is  tliat  in  the 
population  of  the  United  Kingdom  in  the  course  of  fifty 
years  English  and  Scotch  artisans  have  been  largely  sub- 
stituted for  the  semi-starved  or  wholly- starved  peasantry  of 
Ireland,  and  many  of  the  descendants  of  these  Irish  peasants 
are  in  fact  to  be  found  in  our  English  and  Scotch  manu- 
facturing towns. 

The  labouring  population  of  the  towns  of  the  United 
Kingdom,  with  the  exception  of  artisans,  in  good  times 
were  only  a  few  degrees  better  off  than  their  agricultural 
neighljours. 

In  some  conspicuous  cases,  particularly  that  of  hand-loom 
weavers,  there  was  great  distress.  One  condition  of  the 
manufacturing  population,  moreover,  was,  that  of  great 
fluctuation. 

"  A  short  time  back,"  says  Mr.  Thornton,  "  the  greater  part  of  this 
vast  multitude  [400,000  male  adults  =  about  2  millions]  seemed  to 
be  sunk  in  the  lowest  depth  of  misery.  Thousands  were  wholly  un- 
able to  procure  employment,  and  might  be  seen  standing  in  constrained 
idleness  about  the  streets,  or  might  be  found  in  their  dismal  houses 
bending  over  a  scanty  fire,  their  heads  sunk  on  tlieir  breasts,  and  sur- 
rounded by  pale  emaciated  beings,  imploring  them  for  food  which 
they  knew  not  where  to  seek."t 

*  '  Over  Population  and  its  Eemedy/  chap.  iii. 
t  Ibid.,  p.  31. 


OF   THE    WOUKING    CLASSES.  417 

No  doubt  there  have  been  descriptions  in  tlie  hist  year  ftr 
two  of  a  certain  part  of  the  shipbuihling  operatives  as  sufler- 
ing  in  a  simihar  manner  ;  but  wliat  I  wish  to  draw  attention  to 
is,  that  Mr.  Thornton's  description  applies  to  the  greater  part 
of  the  whole  manufacturing  population  (jf  England  ;  the 
condition  of  tlie  agricultural  lal)ourers  in  England,  Scotlnnd, 
and  Ireland,  then  the  mass  of  the  population,  being  wliat 
lias  already  been  described. 

It  would  be  wearisome  to  multiply  details,  but  depression 
in  trade  was  so  different  fifty  years  ago  from  what  it  is  now, 
that  I  may  be  permitted  a  few  farther  extracts.  Stockport 
is  specially  mentioned,  the  I'oor  Law  Commissioners  having 
sent  assistant  commissioners  to  inquire  into  tlie  state  of 
things  there.  Among  many  other  facts  the  assistant  com- 
missioners state : 

"  Of  15,823  individuals,  inhabiting  2,965  houses,  lately  visited  under 
the  direction  of  a  committee  appointed  for  the  purpose,  1,204  only 
were  found  to  be  fully  employed,  2,86G  i)artially  rmployod,  and  4,148 
able  to  work  were  7i;hv1ly  vnthout  employment.  The  remaining;  7,605 
persons  were  unable  to  work.  The  average  weekly  income  of  tliu  above 
15,823  persons  was  l.s.  4i'/.  each.  The  average  weekly  wages  of  those 
fully  employed  was  7s.  Gid.  each.  The  average  weekly  wages  of  those 
partially  employed  4s.  7id.  each."* 

Mr.  Thornton  goes  on  to  add  : — 

"The  distress  of  which  there  are  such  convincing  proofs  was 
aggravated  at  Stockport  by  local  causes,  but  it  existed  in  a  degree 
very  little  inferior  in  most  other  manufacturing  towns.  It  was 
particularly  severe  throughout  Lancashire  and  those  parts  of 
Yorkshire  in  which  the  cotton  manufacture  has  its  principal  seat,  lu 
Manchester  there  were  said  to  be  9,000  families  earning  on  an  average 
only  Is.  a  week.  In  Bolton  out  of  fifty  mills,  wliich  had  formerly 
employed  8,124  workmen,  thirty  mills  with  5,061  workpeople  were 
standing  idle  or  working  only  short  time.  Tiie  weekly  earnings  of 
the  bed-quilt  and  counterpane  weavers  were  reduced  to  loss  than  cue 


*  '  Over  Population  and  its  Remcily,'  p.  37. 


448  FURTHER   NOTES    ON    THE    PROGRESS 

half  of  their  amount  in  1838.  Those  of  the  hand-loom  weavers, 
though  long  before  depressed,  had  fallen  again,  from  6.s.  to  3s.  7 id. 
The  destitution  of  the  oiieratives  and  the  embarrassments  of  their 
employers  were  shared  more  largely  by  the  tradesmen  and  handi- 
craftsmen whose  customers  they  had  been.  In  Bolton  a  diminution  of 
£3,651  took  place  in  the  weekly  amount  of  wages  paid  in  twelve  trades. 
Out  of  150  carpenters,  formerly  earning  25s.  a  week  each,  only  25 
remained  in  full  work,  and  15  in  half  work,  and  the  number  of  masons 
was  reduced  from  140,  earning  34s.  a  week,  to  50,  earning  10s.  6'^ 
Very  similar  and  not  much  more  moderate  were  the  suflferings  of  the 
clothworkers  of  Yorkshire  and  Wiltshire,  of  the  silk  weavers  of 
Spitalfields  and  Macclesfield,  the  lacemakers  of  Nottinghamshire,  the 
fitters  of  Staffordshire,  and  the  hardware  makers  of  the  same  county, 
of  Warwickshire,  and  Sheffield.  In  the  last  mentioned  town,  where 
in  1836  there  was  not  a  single  able-bodied  man  out  of  employment, 
there  were,  in  1842, 1,000  families  supported  by  contributions  from  the 
trades  to  which  they  belonged,  at  the  rate  of  Is.  3(7.  weekly  for  each 
person,  and  hundreds  more  were  in  the  receipt  of  parish  relief.  In 
Leeds  4,025  families,  being  one-fifth  of  the  whole  population,  were 
dependent  on  the  poor's  rates.  But  it  is  needless  to  multiply 
examples,  for  no  one  can  have  forgotten  the  formidable  riots  that  took 
place  in  the  midland  counties  in  the  summer  of  1842,  and  which 
sufficiently  attested  the  desperate  condition  to  which  the  operatives 
were  reduced.  Almost  everywhere  and  in  almost  every  manufacture 
the  complaint  of  the  workman  was  the  same,  of  the  difficulty  of 
obtaining  employment,  and  of  the  utter  impossibility  of  earning  a 
competent  livelihood."* 

As  regards  Scotch  operatives  sx^ecially,  Mr.  Thornton  also 
writes : — 

"  Manufacturing  operatives  are  in  pretty  much  the  same  position  in 
both  countries.  Those  of  Scotland  shared  even  more  largely  than 
their  southern  brethren  in  the  distress  of  1840-42,  when  Paisley  in 
particular  exhibited  scenes  of  woe  far  surpassing  anything  that  has 
been  related  of  Bolton  or  Stockport."  f 

The  point  of  all  this  is  that  whatever  may  have  been  the 
ordinary  wages  in  good  times  of  manufacturing  operatives, 
who  constituted  no  doubt  with  tlie  workmen  in  the  building 

*  '  Over  Population  and  its  Eemedy,'  pp.  78  and  79. 
t  Ibid.,  pp.  37  and  38. 


OF    THE    WORKING    CLASSES.  4i9 

trades  the  most  comfortable  part  of  the  working  population 
of  the  United  Kingdom,  though  after  all  only  a  small  part  of 
that  population,  yet  the  liability  to  extreme  fluctuation  that 
has  been  described  has  to  be  taken  into  account  in  comparing 
even  such  a  population  with  a  similar  population  at  the 
present  time.  The  complete  or  almost  complete  suspension 
of  the  ordinary  wages  for  lung  intervals  not  only  reduces  the 
average  wage,  but  shows  a  general  condition  of  things  which 
makes  it  impossible  to  compare  at  all  the  operative  and 
superior  workman  of  fifty  years  ago  with  similar  classes  at 
the  present  time,  who  have  not  for  many  years — in  fact 
nearly  for  thirty  years — been  subject  to  any  such  general 
suspension  of  wages.  The  proportion  of  such  operatives  and 
superior  workmen  to  the  whole  mass  was  much  smaller  fifty 
years  ago  than  it  now  is,  but  even  the  smaller  mass  then  was 
subject  to  an  extreme  of  fluctuation  of  which  the  present 
generation  has  no  conception. 


IV.— THE  WORKING  CLASS  CONSUMPTION  OF 
MEAT  FIFTY  YEABS  AGO. 

After  the  descriptions  just  quoted  of  the  general  condition 
of  the  masses  fifty  years  ago,  in  which  the  question  of  their 
consumption  of  meat  is  referred  to  among  other  points,  it 
may  seem  imnecessary  to  refer  more  at  lengtli  to  this  ques- 
tion. It  is  only  too  plain  that  the  masses  of  Irish  peasants, 
and  of  English  and  Scotch  agricultural  labourers,  as  well  as 
labourers  in  towns,  who  constituted  a  far  larger  proportion  of 
the  population  of  the  country  than  the  same  classes  do  now, 
had  most  of  them  hardly  any  meat,  very  many  none  at  all, 
in  their  diet,  while  the  "  occasional "  meat  some  of  them 
II.  2  o 


450  FUETHER  NOTES  ON  THE  PROGRESS 

had  was  seldom  anything  else  than  bacon.  At  the  same 
time,  the  better  classes  of  workmen,  the  aristocracy  of  the 
labourers,  who  were  smaller  in  proportion  to  the  population 
than  the  same  classes  are  now,  were  liable  to  fluctuations  of 
employment,  during  which  the  great  majority  had  to  endure 
very  short  commons  indeed.  The  point  of  meat  consumption 
is,  however,  so  important  as  a  test  of  condition,  that  at  the 
risk  of  being  tedious  I  propose  to  add  a  few  more  observations, 
in  order  specially  to  deal  with  a  challenge  given  to  my 
remarks  on  this  head  by  Mr.  Hutchinson  in  the  article 
already  referred  to.  Mr.  Hutchinson's  challenge  enables  me 
to  illustrate  in  a  striking  manner  the  difficulty  of  using 
statistics  properly,  and  the  especial  danger  of  using  figures 
without  thinking  of  the  facts  behind  them. 

The  statement  I  made  in  my  former  paper  which  INIr. 
Hutchinson  challenged  was  as  follows  : — 

"  It  may  be  stated  broadly  that  while  sugar  and  such  articles  have 
declined  largely  in  price  [in  fifty  years],  and  while  clothing  is  also 
cheaper,  the  only  article  interesting  the  workman  much  which  has 
increased  in  price  is  meat,  the  increase  here  being  considerable.  The 
'  only '  it  may  be  supposed  covers  a  great  deal.  The  truth  is,  however, 
that  meat  fifty  years  ago  was  not  an  article  of  the  workman's  diet  as 
it  has  since  become.  He  had  little  more  concern  with  its  price  than 
with  the  price  of  diamonds.  The  kind  of  meat  which  was  maiidy 
accessible  to  the  workman  fifty  years  ago,  viz.,  bacon,  has  not,  it  will 
be  seen,  increased  sensibly  in  price." 

And  Mr.  Hutchinson's  mode  of  challenging  this  statement 
was,  first,  to  omit  altogether  the  last  sentence,  which  admitted 
that  there  was  one  kind  of  meat  consumption  in  which  the 
workman  was  interested  fifty  years  ago — not  a  very  candid 
proceeding,  on  which,  liowever,  I  make  no  farther  comment, 
my  only  object  being  to  make  quite  clear  what  I  did  say  • — 
and  next  to  refute  me,  as  he  supposed,  by  making  the 
following  reference  to  I'orter's  '  Progress  of  the  Nation  : ' — 


OF    THE    WORKING    CLASSES.  451 

"In  answer  to  this  astounding  Ktatcmont,"  says  Mr.  irutchinsou, 
''I  cull  the  following  from  Mr.  Porter's  'Progress  of  the  Nation' 
Section  1,  pp.  122  and  123,  edition  183G  :— 

.  .  £      s.      </. 

Average  earnings  of  labouring  men,  compiled ^ 

from  answers  to  queries  from  856  parishes  in  (    'J7    17    10 

England.    Men  only   .         .         .         .         j 

Ditto  from  GG8  parishes,  with  wages  of  wife  and 

children      .         .         .         ,         .         _         .     13     H)     10 


Annual  average  income  of  family    .  £41    17      8 


To  the  farther  question, '  could  such  a  family  subsist  un  the  aggregate 
earnings  of  the  fatlier,  mother,  and  children,  and  if  so,  on  what  food  ? ' 
answers  were  received  from  899  parishes  to  this  effect  :— 

Number  of  parishes       .....  899 

No  (simply)          ••....  71 

Yes(     „    ) 212 

Barely,  or  without  meat        ....  125 

With  meat  .......  4yi 

which  gives  an  average  of  over  50  per  cent,  of  the  labouring  class- 
that  is,  the  poorest  paid  class  of  labour— who  had  meat  as  a  portion  of 
their  regular  diet.  If  we  take  into  account  the  large  number  of 
artisan  families,  dwellers  in  towns,  ]Mr.  Giffcn's  extraordinary  assertion 
will  not  bo  left  witli  a  leg  to  stand  on. 

"  If  farther  refutation  of  Mr.  Giffen's  glaring  misstatements  were 
necessary,  there  are  great  numbers  of  men  and  women  living  who  can 
supply  data  for  a  reliable  history  of  the  social  condition  of  the  people, 
even  were  there  no  written  materials  available  for  the  purpose." 

Mr.  Hutcliinson,  according  to  this,  believes  that  over  oO 
per  cent,  of  tlie  English  agricultural  labourers  had  meat  as  a 
regular  portion  of  their  diet  fifty  years  ago,  and  not  merely 
pork  or  bacon,  which  I  had  referred  to  as  the  kind  of  meat  in 
which  workmen  were  almost  exclusively  interested,  but  other 
meat — the  meat  which  has  since  risen  in  price.  He  appeals 
not  only  to  a  table  in  Porter's  '  Progress  of  the  Nation,'  but 
to  the  recollections  of  living  men  and  women.  After  the 
passages  I  have  already  (pK.tud,  not  merely  recollections  of 
people  still  living  but  contemporary  statements  by  people 

O   r-   9 

t^    Lt    ^ 


452  FURTHER  NOTES  ON  THE  PROGRESS 

like  the  late  Lord  Beaconsfield,  Mrs.  Gaskell,  ]\Ir.  Thornton 
and  Others,  I  am  sure  everyone  will  agree  that  Mr.  Hutchin- 
son's belief  is  itself  astounding.  Those  who  knew  the 
working  classes  best  fifty  years  ago,  and  their  condition 
was  inquired  into  frequently,  were  certainly  under  a 
different  impression,  while  the  records  of  money  wages 
showed  it  to  be  impossible'  that  the}'  could-  have  meat 
other  than  bacon  as  a  regular  part  of  their  diet,  while  as  to 
bacon  there  was  itself  a  doubt. 

But  what  of  Porter's  table  which  Mr.  Hutchinson  sum- 
marises ?  I  believe  that  you  will  not  be  surprised  to  learn 
that  the  table,  like  many  other  statistical  tables,  requires  a 
little  consideration,  and  perhaps  no  one  would  have  been 
more  surprised  than  ]\Ir.  Porter  to  see  the  use  which  Mr. 
Hutchinson  makes  of  it.  The  table  is  given  by  Mr,  Porter  to 
assist  a  comparison  between  the  condition  of  English  agricul- 
tural labourers  and  similar  labourers  in  different  continental 
countries,  and  he  makes  hardly  any  comment  on  it.  The 
primary  question  submitted,  however,  to  those  who  answered 
it,  was  whether  the  earnings  recorded  by  way  of  answer  to 
the  previous  questions  were  sufficient  to  enable  the  average 
labourer  to  live  without  parish  relief.  The  "  how "  was  a 
secondary  question,  not  put  so  carefully,  and  to  which  it  was 
obvious  correct  answers  were  not  so  easily  to  be  obtained. 
The  reply  that  the  labourer  could  live  or  could  not  live 
without  parish  relief  was  definite  enough,  as  also  the  state- 
ment that  he  could  live  barely  or  without  meat,  this  being 
purely  a  negative  statement ;  but  the  phrase  "  with  meat  "  is 
obviously  not  a  very  precise  one,  and  nothing  more  seems  to 
have  been  meant  by  it  than  that  the  labourers  in  question 
had  or  could  have  meat  occasionally,  a  feature  of  interest  in 
making  comparisons  with  foreign  labourers,  who  never  had 
meat  at  all,   but  not  the  same   thing  as  a  statement  that 


OF    THE    WORKING    CLASSES.  453 

"  meat "  was  a  regular  constituent  of  the  labourer's  diet.  I^Ir. 
Hutchinson's  gloss  that  half  tlie  poorest-paid  class  of  laljour 
fifty  years  ago  "  had  meat  as  a  portion  of  their  regular  diet," 
is  entirely  unsupported  by  an^'thing  in  Porter,  or  by  a  due 
consideration  of  what  the  phrase  "  with  meat "  in  the  table 
probably  means. 

I  need  not  add  that  in  dealing  with  such  a  table  the  value 
of  the  information  contained  should  be  scrutinised  very  care- 
fully.    Mr.  Porter  does  not  criticise  the  figures,  but  neither 
does  he  vouch  for  them,  or  lay  much  stress  upon  them ;  and 
when  we  come  to  look  into  them,  I  think  it  may  be  said  that 
the  average  earnings  arrived  at  by  summarising  the  answers 
to  a  previous  question  is  not  itself  a  particularly  good  figure  ; 
while  on  such  a  question  as  how  labourers  live,  the  answers  are 
still  more  ditticult  to  summarise.     The  sources  of  the  infor- 
mation are  replies  to  questions  in  a  circular  from  the  Poor 
Law  Board,  by  the   clergyman  or   some  local  gentleman  in 
each  of  nine  hundred  parishes — about  a  fifteenth  part  of  the 
total   parishes   in   England — who  are  asked   to  state  what 
average  wages  are,  and  whether  and  how  the  labourers  can 
live  on  them  ?     Clearly  in  such  replies  there  is  an  unusual 
opening    for    the    personal    error   which   the   most   careful 
scientific  observations  are  exposed  to.     In  making  such  an 
average,  even  the  best  observers  would  be  liable  to  be  swayed 
by  their  own  personal  experience  :  one  man  would  take  for 
a  type  the   sober,  thrifty  labourer  in  regular   employment, 
perhaps  a   labourer   who   was  really  more  or  less  skilled ; 
another  would  take  the  very  rudest  labourer  ;  very  few  would 
or   could  take  the  trouble  to  make  a  proper  average.     In 
actual  fact  also  many  of  the  observers  in  the  present  case,  as 
they  show  by  their  answers,  were  highly  prejudiced,  a  con-e- 
spondent  in  one  parish  saying  the  poor  can  do  very  well  an  1 
are  only  too  well  off,  and  a  correspondent  in  a  neiglib. curing 


454  FURTHER   NOTES    ON    THE    PROGRESS 

parish  saying  tliey  cannot  live  at  all.  Apart  from  prejudice,, 
the  difficulty  of  defining  Nvhat  is  meant  by  an  average  wage 
is  serious.  To  how  many  non-statisticians  would  any  of  us 
trust  an  inquiry  as  to  what  an  average  is,  and  how  carefully 
we  should  scrutinise  the  replies  when  we  got  them  to  see 
what  each  man  meant  ?  But  the  replies  thus  obtained  from  a 
small  percentage  of  places  only  are  added  together  and 
divided  by  the  number,  so  as  to  give  the  average  earnings  of 
agricultural  labourers  in  all  England,  and  so  as  to  show  how 
they  live,  whether  with  meat  or  not.  How  differently  each 
man  was  likely  to  define  in  his  own  mind  what  the  phrase 
"  with  meat "  meant ! 

But  we  are  not  left  to  conjecture  what  random  answers 
were  given  in  reply  to  the  question  how  the  average  labourer 
lived.  I  extract  from  Porter,  and  put  in  the  Appendix,  the  de- 
tailed summary  of  the  answers,  county  by  county  (Appen- 
dix E.),  and  I  have  also  added  in  several  cases  (Appendix  E.)' 
the  actual  answers  from  which  this  summary  is  compiled. 
It  is  impossible  to  go  a  step  without  perceiving  that  the 
phrase  "  with  meat "  is  a  very  elastic  expression.  Thus  tO' 
take  Wiltshire,  you  will  see  from  the  table  that  out  of  twenty- 
four  answers  in  that  county,  no  less  than  twelve  are  put  down 
as  being  to  the  effect  that  labourers  had  meat.  I  confess  that 
after  what  I  had  read  2}C(ssim  of  the  condition  of  labourers  in 
Dorsetshire,  Wiltshire,  and  Somersetshire,  I  was  somewhat 
staggered  by  this,  if  the  phrase  "with  meat"  were  to  be 
understood  as  meaning  that  the  Wiltshire  labourer  had  meat 
as  a  regular  portion  of  his  diet,  and  not  merely  bacon 
''  occasionally,"  but,  as  Mr.  Hutchinson  implies,  other  meat 
than  bacon.  The  actual  twenty-four  answers  from  Wiltshire 
are,  however,  as  follows,  and  the  point  is  so  serious  that  I 
need  make  no  apology,  I  trust,  for  inserting  them  in  the. 
text : — 


OF    THE   ^YORKING    CLASSES. 


455 


Name  of  Place  and  of  Respomk'nt. 

Answers. 

Aklcrbury  Parish  and  Sarum 

Yes.  Cannot  say  upon  what  food.  Would 

Division — 

be  improved  by  renting  a  small  plot 

G.  Ford,  J.P. 

of  land. 

St.  Andrew,  Blunsdon— 

Yes ;  upon  bread,  potatoes  and  tea. 

J.  J.  Galley. 

Generally  speaking,  they  could  not. 

J.  Wild. 

Box— 

Yes ;  principally  upon  potatoes. 

S.  Pincliin,  overseer. 

North  Bradley — • 

Yes,  certainly  they  could ;  comfortably. 

S.  Singer,  assistant  over- 

seer. 

Burcombe — 

In  the  present  times  they  might;  on 

J.  Rogers,  overseer. 

good  whcaten   bread,  liutter,  cheese, 

bacon,  and  potatoes;  most  of  them 

. 

having  ground. 

Castle  Coorabe — 

Could  barely  subsist  on  these  earnings. 

G.  P.  Scrope. 

Should    tlie    husband   drink,  or  bo 

[Answer  also  refers  generally 

below  the  average  of  labourers,  the 

to  the  Hundred  and  Di- 

food would  be  ])otatoes  alone,  with 

vision  of  Chippenham.] 

little  or  no  bread. 

Chilmark — 

Yes ;  on  the  produce  of  the  garden  and 

r.  Lear,  rector. 

pig-meat,  and  the  corn  afforded  them 

at  a  reduced  jirice. 

Chippenham — 

Yes;   food — bread,  bacon,  cheese,  and 

G.  S.  Bradbury,  assistant 

potatoes. 

overseer. 

Compton  Chambcrlaine— 

Do  not  think  they  could. 

J.   King,    churchwarden 

and  overseer. 

Corsham— 

Yes ;  chiefly  on  bread  and  vegetables.. 

W.    Arnold,     assistant 

overseer    and    vestry 

clerk    on     behalf    of 

Select  Vestry. 

Corslcy — 

Yes ;  but  almost  wholly  on  vegetables, 

H.  A.   Pussel,  church- 

■with bread  occasionally. 

warden. 

Downton — 

Yes ;  on  bread  and  potatoes,  with  tho 

G.  Matcham. 

addition    of    bacon    about    once    a 

week. 

J.    Ivccvcs    and    J.    G. 

They  would  get  no  relief  from  the  parisli. 

Bailey,     trustees     of 

but  do  not  know  how  they  manage. 

Stoclanan's  Charity. 

Fisherton  Anger — 

They  might  live  well  on  bacon,  bread, 

H.  G.  de  Starck,  curate. 

and  potatoes. 

W.  Blake. 

Fontliill  Gifford— 

A  labourer  can  with  difficulty  supply 

J.  Still,  jun.,  officiating 

his   family  with  food,  consisting  of 

minister. 

potatoes  and  bread. 

456 


FUBTHER   NOTES    ON    THE    PROGRESS 


Name  of  Place  and  of  Respondent. 


"West  Grimstead,  Pitton,  and 
Farley — 

G.  F.  Watkins,  curate  of 
Grimstead  and  Farley. 
Heytesbury,  C,  A,  A'  Court, 
J.P. 


Heddington — 

J.  T.  Du  Boulay,  rector. 

District  of  Himgerford  and 
Eamsbiiry — 
E.W.L.  Popham,  Lieut.- 
General. 
Liddington — 

H.  Beeves. 
Monkton  Farleigh — 

J.  Long. 
Norton  Bavant — 

J.  M.  Sidford,  overseer. 
Pitton  and    Farley,  united 
parishes — 

C.  F.  Watkins,  curate  of 
Farley. 
Eodborne  Tything  (Malmes- 
bury  parish) — 
E.  Pollen. 
Whiteparish — 

G.  Lawrence,  J.?.,  and 
one  of  the  Select 
Vestry. 


Answers. 


Bread,  potatoes,  and  other  vegetables, 
and  tea  form  their  principal  food 
with  a  small  quantity  of  butter, 
cheese,  and  bacon. 

The  families  can  and  do  subsist  on  these 
earnings.  They  have  iisually  tea  in 
the  morning,  potatoes  and  salt  with 
a  few  greens  in  the  middle  of  the  day, 
with  the  addition  of  bread,  and  oc- 
casionally a  small  piece  of  bacon  in 
the  middle  of  the  dish  of  potatoes  at 
the  evening  meal. 

Several  families,  in  this  case  have  sub- 
sisted without  parish  relief  on  bread, 
potatoes,  a  little  bacon,  and  tea. 

The  family  could  subsist  on  bread,  meat, 
and  vegetables,  with  wholesome  beer, 
if  the  malt  could  be  procured  free  of 
duty. 

Yes. 

There  is  no  want  in  this  parish. 

I  consider  they  can  live. 

They  might  on  bread,  butter,  cheese, 
tea,  vegetables,  and  occasionally  a  bit 
of  bacon. 

They  subsist  a  good  deal  on  potatoes, 
and  could  live  decently  on  these 
earnings.    They  kill  a  pig  once  a  year. 

A  family  can  subsist  on  the  earnings ; 
the  food — tea,  bread,  butter,  cheese, 
and  bacon;  the  latter,  supposing  a 
pig  is  kept,  which  is  generally  the 
case.  Fresh  meat  is  scarcely  ever 
bought  by  the  labourers. 


It  will  be  observed  from  this,  that  in  only  one  of  all  tlie 
answers  is  meat  eo  nomine  spoken  of ;  in  all  the  others,  where 
any  sort  of  meat  is  spoken  of,  the  word  is  bacon  or  pig-meat. 
Usually  too  the  bacon  is  spoken  of  as  only  occasional.  The 
curate  of  West  Grimstead,  for  instance,  speaks  of  a  small 
quantity  of  butter,  cheese,  and  bacon  entering  into  the  diet  of 


OF   THE    WORKING    CLASSES.  457 

die  labourers,  and  iMr.  C.  A.  A'Court,  J.P.,  of  Heytcsbury, 
speaks  of  "  occasionally  a  small  piece  of  bacon  in  the  middle 
of  the  dish  of  potatoes  at  tlie  eveninj^^  meal."  Mr.  Lawrence, 
J.  P.,  Whiteparish,  says  expressly,  after  referrin*,'  to  bacon, 
that  "fresh  meat  is  hardly  ever  bought  by  the  labourers." 
We  may  thus  see  what  the  phrase  "  witli  meat "  means.  It 
is  an  occasional  bit  of  bacon  only :  this  is  what  'Mv. 
Hutchinson  means  by  meat  formiiii;  a  re.^ular  ]»orti()ii  oi'  the 
diet  of  the  poorest  paid  class  of  labour  fifty  years  ago. 

■\\niile  printing  in  full  the  answers  from  several  otlier 
counties  in  the  Appendix,  I  may  state  that  tliere  are  no  doul»t 
differences  of  counties,  bacon  being  more  regularly  part  of  tin- 
labourer's  diet  in  the  north  and  east  than  in  the  soutli  and 
west,  including  Wales.  But  butcher  meat  or  fresh  meat  is 
not  referred  to  specifically  in  more  than  a  few  instances  out 
of  the  nine  lumdred  as  forming  a  part  of  the  labourer's  diet, 
and  in  all  cases  it  is  spoken  of  as  an  occasional  luxury.  The 
references  to  meat  generally  are  more  numerous,  but  the 
inference  of  course  is  tliat  pork  or  Ijacon  is  meant,  especially 
when  the  statements  from  neighbouring  parishes  are  compared. 
(See  Appendix  F.)  There  can  be  no  question  that  the 
answers  altogether,  which  can  easily  be  found  in  tlie  Dlue- 
book,  are  very  far  indeed  from  supporting  the  statement  that 
50  per  cent,  of  English  agrieidtural  labourers  fifty  years  ago 
had  meat  as  a  regular  portion  of  their  diet.  At  most,  a  much 
smaller  percentage  had  bacon,  and  usually  the  bacon  was 
occasional  only. 

v.— AGGREGATE  INCOME  AXD  CLASSIFICATIOX 
FIFTY  YEARS  AGO  AXJ>  X0]]\ 

To  illustrate  the  wiiole  subject  fartlier,  I  j>ropose  now  to 
make  a  rougli  comparison  between  the  incomes  of  lliedifterent 
classes  of  the  people  fifty  years  ago  and  at  the  jnvsent  time 


458  FURTHER   NOTES    ON    THE    PROGRESS 

which  will  not  only  show  that  working-class  incomes  on  the 
average  have  increased  100  per  cent,  or  thereabouts,  but  in 
what  way  the  improvement  has  arisen.  What  has  been  said 
already  as  to  the  non-agricultural  classes  having;  increased 
more  than  the  agiicultural,  which  liave  in  fact  declined,  and 
as  to  population  in  Great  Britain  having  increased  while  in 
Ireland  it  has  diminished,  has  helped  to  give  us  some  ideas 
on  the  subject ;  but  the  problem  may  be  attacked  directly.  - 
In  my  former  paper  I  avoided  any  attempt  of  this  sort. 
Assuming  a  certain  gross  income  at  the  present  time,  and 
working  backwards  on  the  assumption  that  the  working-class 
improvement  had  been  100  per  cent,  in  fifty  years,  I  gave  a 
short  table  illustrative  of  my  general  idea  as  to  what  had 
occurred  in  tlie  fifty  years  ;  but  I  attempted  no  comparison 
between  a  period  fifty  years  ago  and  the  present  time,  using 
the  data  actually  in  existence  fifty  years  ago  and  comparing 
them  with  present  data. 

In  making  such  a  comparison  now  I  do  not  propose  any 
original  work.  Such  a  work  seems  hardly  necessary.  Short 
of  a  national  census  of  incomes,  the  data  for  any  statement 
of  aggi-egate  incomes  must  always  be  imperfect;  while> 
notwithstanding  necessary  imperfections,  I  have  always 
found  such  estimates  as  those  of  Mr.  Dudley  Baxter  and 
Mr.  Leone  Levi,  who  have  studied  the  subject,  and  made  a 
good  use  of  the  materials  they  found,  sufficient  for  any 
practical  discussions.  What  I  propose  now  to  do  is  rather 
to  point  out  how  the  figures  which  others  have  compiled  are 
adapted  to  the  present  purpose,  and  how  little  cause  there 
is  to  doubt  the  broad  conclusions  to  be  arrived  at,  although 
the  detail  is  in  many  respects  imperfect. 

To  begin  with  the  present  time.  Mr.  Dudley  Baxter,  in  his 
estimate  of  the  national  income  in  1867,  arrived  at  the 
general  conclusion  that  there  were  13,720,000  persons  in 
the   United   Kingdom,  out  of  about   30   millions  with  in- 


OF   THE   •WORKING    CLASSES.  459 

dependent  incomes;  of  wliom  1,1G2,000  were  assessed  to 
the  income  tax ;  1,497,000  belon,^red  to  the  middle  and 
upper  classes,  but  had  incomes  of  less  tlian  £100  a  year; 
and  10,961,000  l.t ■longed  to  what  he  called  the  "manual- 
labour  class."  The  total  income  of  all  these  classes  he  made 
out  to  be  814  million  pounds,  and  the  income  of  the  manual- 
labour  class  only,  whicli  is  by  no  means  to  be  identified  or 
confounded  with  that  of  tlie  working  classes  in  the  economic 
sense  of  the  word,  325  million  pounds. 

Mr.  Leone  Levi  about  the  same  time,  dealing  with  the 
"working  classes"  only,  with  a  class  that  is  corresponding 
nearly  to  the  "  manual-labour  "  class  of  Mr.  Dudley  Baxter, 
dealt  witli  numbers  that  were  much  the  same,  viz.,  11 
millions,  and  gave  them  an  income  of  418  million  pounds. 
So  far  as  I  can  judge,  the  result  arrived  at  by  i\lr.  Leone  Levi 
is  better  justilied  than  that  of  Mr.  Dudley  Baxter,  and  tlie 
detail  of  the  calculation  is  at  any  rate  set  out  with  greater 
clearness.  The  main  differences  are  apparently  to  ]je  ac- 
counted for  in  two  ways,  apart  from  the  different  averages 
of  wages  ap])lied  to  tlie  number  of  wage-earners.*  (1.) 
Mr.  Levi  allows  four  weeks  idle  time  in  the  year,  ami 
Mr,  Dudley  Baxter  deducts  in  most  cases  20  per  cent,  from 
the  total  of  fifty-two  weeks  for  out  of  work,  sick,  and 
paupers  ;  and  (2)  i\lr.  Dudley  Baxter  omits  from  the  reckon- 
ing a  certain  number  of  foremen  and  overlookers  who  are 
included,  as  far  as  I  can  judge,  in  Mr.  Levi's  ligures.  The 
two  differences  stated  would  account,  I  think,  for  more  than, 
half  the  difference  between  Mr.  Dudley  Baxter  and  yiv.  Levi. 

The  result  is,  that  if  we  take  Mr.  Dudley  Baxter's  ligures 
generally,  but  substitute  Mr.  Levi's  as  regards  the  manual- 

*  Some  of  tlicso  difleronc'cs  are  imiiortant  cnougli.  For  instance, 
dealing  with  domestic  servants,  Jlr.  Leone  Levi  culcnJatcs  that  tho 
average  wage  is  £3o  per  annum,  and  Mr.  Dudley  Baxter  makes  it 

£o2  lUs.  for  women  and  £23  for  girls. 


460  FUETHER  NOTES  ON  THE  PROGRESS 

labour  class,  we  should  get  even  a  better  estimate,  I  think, 
for  the  aggregate  income  of  the  country  twenty  years  ago 
than  tliat  Mr.  Dudley  Baxter  gave.  The  total  in  round 
iigures  might  liave  been  put  at  900  instead  of  800  millions. 
1  propose  to  start  from  about  this  basis  in  stating  a  figure  for 
the  aggregate  income  of  the  nation  at  the  present  time  in  the 
form  which  Mr.  Dudley  Baxter  adopted. 

To  Mr.  Dudley  Baxter's  figures  thus  amended  we  have  now 
to  add,  first  of  all,  one-fifth  for  the  increase  of  population,  and 
next  a  certain  proportion  for  the  average  increase  of  earnings 
per  head.  Dealing  with  his  figures  in  this  way,  and  re- 
arranging them  so  as  to  distinguish  Great  Britain  and 
Ireland,  we  get  the  Table  on  p.  461. 

Of  course  I  do  not  put  forward  this  figure  as  anything  very 
exact.  What  I  should  like  to  point  out  is  that  to  a  large 
extent  it  is  based  on  actual  figures,  those  of  the  income-tax 
returns,  while  as  regards  the  other  figures  the  addition  per 
head  to  those  which  Mr.  Dudley  Baxter  and  Mr.  Levi  gave 
nearly  twenty  years  ago  is,  as  a  rule,  only  10  per  cent.  The 
average  increase  per  head,  according  to  j\Ir.  Levi's  calculation, 
is  more  than  this,  and  I  have  not  used  liis  figure,  simply 
because  I  found  Mr.  Baxter's  arrangement  more  convenient 
for  the  present  purpose.  I  am  quite  satisfied,  looking  at 
many  details  I  have  before  me,  that  the  average  increase  of 
wages  between  1867  and  a  date  two  or  three  years  ago  cannot 
have  been  less  than  10  per  cent.* 


*  In  the  table  I  made  use  of  in  my  former  paper,  I  assumed  the 
figure  of  1200  millions  as  the  income  of  the  people  of  the  United 
Kingdom.  I  am  satisfied,  having  looked  more  into  the  details  since, 
that  I  could  not  have  properly  constructed  a  table  like  the  present 
with  any  less  figure  than  1270  millions,  which  is  Mr.  Levi's  figure.  I 
have  a  strong  impression  indeed  that  a  much  larger  figure  might  be 
taken,  the  figure  of  445  millions  as  the  income  of  the  non-agricultural 
manual-labour  class  in  Great  Britain,  giving  an  average  per  head  very 
little  more  than  what  is  allowed  for  the  agricultural  manual-labour 


OF   THE    WORKINO    CL.'VSSES. 


461 


Income  of  the  United  Kingdom  in  1883,  based  on  I\Ir.  Dudley  Baxter's 
Estimate  in  18G7  as  amended  above,  with  an  addition  of  al>out 
One-Fifth  for  Increase  of  Population,  and  about  One-Tenth  to 
the  Income  per  Head  of  Classes  not  in  Income  Tax  Koturns, 
distinguishing  also  between  Agricultural  and  other  Incomes. 


I.  Great  Britain, 

Income-tax  incomes 
Upper  and  middle  classes  be-'i 
low  income  tax    .         .         .  / 
Manual-labour  class 

Total  . 

II.  Ireland. 
Income-tax  incomes 
Upper  and  middle  classes  be-"> 
low  income  tax    .         .         .} 
Manual-labour  class 

Total  . 

Grand  total  . 

Persons. 

Income. 

Agricul- 
tural. 

N'on-.\gri- 
cultural. 

1   Total. 

Mlns. 
1-4 

1-5 
II-6 

Mlns.  £ 
90 

23 

70 

Mlns.  £ 
486 

84 

445 

Mlns.  £ 
57G* 

107 
515 

H-5 

183 

1,015 

1,198 

O*  I 

0-3 
1-6 

10 

7 

20 

16 

4 

15 

20* 

11 

35 

2-0 

37t 

35 

72 

i6-6 

220 

1 ,050 

1,270 

The  (question,  then,  is  how  to  make  up  a  corresponding  table 
for  a  period  fifty  years  ago.  The  task  is  not  so  difficult  as  it 
seems,  for  one  very  good  reason.  Fifty  years  ago  the  income 
of  the  nation  was  in  proportion  much  more  largely  agricul- 

class.  The  total  numbers  of  the  manual-labour  class,  following  Mr. 
Dudley  Baxter's  calculation,  are  13,200,000,  which  is  1,000,000  more 
than  Mr.  Levi  gives,  although  both  authorities  were  substantially 
agreed  for  1867.  The  figures  are  so  large,  that  the  difference  in  the 
average  income  per  head  is  not  material. 

*  Only  the  net  income  from  Schedule  B.  is  here  included,  the  differ- 
ence between  gross  and  net  under  Schedule  B.  being  carried  over  to  the 
income  of  upper  and  middle  classes  not  included  in  income-tax  returns. 

t  I  believe  this  figure  should  be  really  somewhat  larger.  But  it 
will  be  understood  this  Table  does  not  pretend  to  accuracy  of  detail. 
I  have  simply  followed  the  plan  described  in  the  hejiding,  so  as  to 
obtain  general  figures  good  enough  for  the  present  discussion. 


462 


FURTHER   NOTES    ON    THE    PROGRESS 


tural  than  it  is  now,  while  the  total  income  from  agriculture 
is  ascertainable  with  more  or  less  exactness.  It  is  in  fact 
possible,  if  we  can  arrive  at  a  correct  estimate  of  the  agricul- 
tural income,  to  state,  with  the  help  of  the  income-tax  returns 
for  1843  for  Great  Britain,  and  1854  for  Ireland,  very  nearly 
three-fourths  of  the  aggregate  income  of  the  country,  making 
an  estimate  only  for  the  remaining  fourth  or  thereabouts.  I 
have  drawn  up  the  following  table  : — 


Income  of  the  United  Kingdom  in  1835-40,  based  on  Income-Tax 
Eeturns  for  1843,  Estimate  of  Value  op  Agricultural 
Produce,  and  Estimates  of  Agricultural  Wages,  and  other 
Data. 


I.  Great  Britain. 
Income-tax  incomes 
Upper  and  middle  classes  bc-"i 
low  income  tax    .         .         .  / 
Manual  labour  classes     . 

Total  . 

II.  Ireland. 
Income-tax  incomes 
Upper  and  middle  classes  be-l 
low  income  tax    .         .         .  / 
Manual-labour  class 

Total  . 

Grand  Total  . 

Persons. 

Income. 

Agricul- 
tural. 

Non-Agri- 
cultural. 

Total. 

Mlns. 
l*o 

I'O 

5-5 

Mlns.  £ 
■    63 

20 

42 

Mlns.  £ 
165 

62 

So 

Mlns.  £ 
228 

82 
122 

7-5 

125 

307 

432 

O"  I 

0-3 
3-5 
3-9 

12 

8 

34 

10 

4 

15 

22 
12 
49 

54 

29 

83 

II-4 

179 

336 

515 

Comparing  this  table  with  the  similar  table  for  the  present 
time  on  p.  461,  it  is  evident  at  once  that  the  inferences 
drawn  from  the  increase  of  many  different  money  wages 
throughout  the  country,  and  from  the  obvious  changes  in  the 
composition   of  the  mass   of  population  in   fifty  years,  as 


OF   THE   AVOKKING    CLASSES. 


4(]3 


explained  in  my  former  paper  and  in  tin-  earlier  ]»arL  of  the 
present  paper,  are  fully  confirmed.  Aectjrdin^f  to  tliis  new 
iind  independent  statement,  the  income  of  the  manual-laljour 
classes  per  head  has  increased  on  the  average  much  more 
tlian  100  per  cent. 


]\Ianual-labour  class  at  present 

„                 fifty  years  ago . 

Numbers. 

Income. 

Income 
per  head. 

Mlns. 

13-2 

9-0 

Mlns.  £ 

550 
171 

£ 

19 

This  is  even  more  than  anything  I  ventured  to  estimate 
before. 

It  is  also  evident  how  it  is  that  tlie  improvement  in  the 
position  of  our  working  classes  is  so  great  as  compared  witli 
fifty  years  ago.  The  changes  I  referred  to  in  the  earlier  part 
of  this  paper  have  obviously  occurred.  While  the  population 
of  Ireland  fifty  years  ago  was  one-third  of  the  total,  it  is  now 
only  one-eighth  or  thereabouts.  While  the  agricultural 
income  fifty  years  ago  was  nearly  two-fifths  of  the  t(jtal,  it  is 
now  only  one-sixth.  Wliile  the  manual-labour  class  has 
grown  from  9  millions  to  13  millions,  or  over  40  per  cent,  in 
numbers,  the  increase  in  Great  Britain  is  from  5^^  to  IH 
millions,  or  about  double,  and  in  Ireland  there  is  a  decrease 
from  3J  to  little  over  Ih  millions.  While  the  agricultural 
income  with  numbers  diminishing  has  improved  greatly, 
the  income  from  other  sources  has  improved  even  more, 
and  the  whole  increase  of  population  is  sustained  by  it. 

The  only  doubt  about  these  figures,  I  think,  will  l)e 
whether  they  fully  represent  the  extent  of  the  change  that 
has  taken  place.  They  only  show  an  average  improvement 
of  70  per  cent,  in  the  money  wages  per  head  of  the  uou-agi'i- 


46-t  FURTHER^^NOTES    ON    THE    PROGRESS 

cultural  classes  iu  Great  Britain,  comparing  the  average  fifty 
years  ago  with  the  average  at  the  present  time.  But  this 
improvement  implies  that  on  the  average  labour  in  the 
United  Kingdom  has  improved  over  100  per  cent. ;  because 
the  non-agiicultural  labour  of  Great  Britain,  which  was  the 
highest  paid  fifty  years  ago,  has  increased  to  a  dispropor- 
tionate extent.  It  has  increased  enormously  in  numbers, 
while  agricultural  labourers  in  Great  Britain  have  rather 
declined,  and  labour  in  Ireland,  where  wages  were  still  lower 
than  in  Great  Britain,  has  enormously  diminished. 

It  will  be  nrged,  perhaps,  that  what  the  working  classes  in 
Great  Britain  have  to  do  with  is  their  own  condition.  If 
the  non-agricultural  classes  are  only  70  per  cent,  better  off 
in  money  wages,  it  will  be  urged  that  they  have  not  so  much 
to  boast  of.  Tor  reasons  already  given  I  doubt  if  this  per- 
centage represents  the  whole  improvement  in  the  case  of  the 
artisan  classes,  especially  if  we  take  into  account  the 
reduction  of  hours,  and  such  changes  as  have  been  made  by 
the  abolition  of  the  truck  system  and  the  like  improvements  ; 
but  admitting  it  to  be  the  maximum  improvement  in  their 
case,  it  is  really  most  essential  to  keep  in  mind  that  in  a 
comparison  such  as  that  we  are  engaged  upon,  we  are  not 
comparing  merely  the  artisan  of  the  present  day  with  the 
artisan  of  fifty  years  ago,  but  to  a  large  extent  we  are  com- 
paring classes  who  are  non-artisans  with  the  agricultural 
labourers,  whether  in  Great  Britain  or  Ireland,  from  whom 
they  are  really  descended.  If  the  descendant  of  an  Ulster 
peasant  or  farmer  is  now  earning  25s.  a  week,  or  thereabouts, 
while  employed  in  the  lowest  form  of  skilled  labour  in  Great 
Britain,  we  have  to  compare  him  not  merely  with  the  similar 
labourer  fifty  years  ago  who  was  earning  12s.  to  15s.  a  week, 
Ijut  with  the  still  lower  paid  labourer  of  Ireland,  who  was 
earning,  at  the  outside,  8s.  per  week. 


OF    THE    WORKING    CLASSES.  40.' 

Astouiidiug  as  it  may  seem  at  first,  tliereforo,  it  is  not 
really  so  astounding  to  find  that  the  position  of  the  "wage- 
earner  in  the  United  Kingdom  has,  on  tlie  average,  improved 
not  merely  100  but  ovur  100  per  cent,  in  tlie  hist  fifty  years, 
as  lar  as  money  wages  are  concerned. 

It  would  of  course  he  a  cause  for  dissatisfaction  if  notliiiig 
more  had  been  done  in  the  last  fifty  years  than  to  elevate 
the  masses  of  tlie  community  to  a  level  lathcr  liiglier  tlimi 
that  of  the  lowest  jjaid  non-agricultural  labourer  fifty  years 
ago.  The  very  general  averages  we  have  been  dealing  with, 
however,  do  not  bring  out  fully  the  internal  changes  wliich 
liave  been  occurring  in  the  artisan  classes,  or  the  i'act  tliat 
numbers  have  been  passing  over  into  the  classes  of  income^ 
tax  payers,  or  into  the  upper  and  middle  classes  just  below 
the  income-tax  limit — that  these  classes  in  turn  liave  been 
increasing  in  rather  larger  numl)ers  than  the  community  as  a 
Wiiole.  In  this  connection  the  figures  I  referred  to  earlier  in 
this  paper  are  specially  important.  The  classes  whose 
improvement  must  have  caused  the  increase  of  assessments 
under  Schedule  I),  in  Englmid,  between  1.S4:'.  ami  llic  javsmi 
time,  must  be  tlie  artisans  and  lower  middle  class  with 
incomes  under  £100;  those  classes,  in  other  words,,  just 
Ijelow  the  income-tax  limit.  I  may  refer,  moreover,  to  the 
undoubted  fact  which  appears  from  the  most  recent  census 
returns,  that  the  commercial  class  and  ])rofessional  class, 
which  include  clerks,  doctors,  teachers  and  others  belonging 
to  the  middle  and  upper  classes,  have  increased  more  rapidly 
than  the  increase  of  the  general  population.  I'lic  figures  are 
unusually  difficult  of  comparison,  but  the  following  may,  I 
Ijelieve,  be  accepted  as  a  correct  approximation  to  tlie  facts 
in  Eiifi'land : — 


II.  L'  11 


466 


rrr.TiiF.u  xotes  on  the  rROOREss 


Statement  showing  the  Increase  of  the  Profession' al  and 
Commercial  Classes  in  England  between  1851  and  1881.* 


Year. 

1'rof.j.ssional. 

Commercial. 

185,      .      .      . 

357,000 

529,000 

1861      .      .      . 

482,000 

633,000 

1871      .      .      . 

r,84,000 

815.000 

188 1      .      .      . 

017,000 

980 . 000 

It  is  thus  evident  that  along  witli  the  substitution  of 
artisan  classes  for  rude  labourers,  the  proportion  to  the 
whole  community  of  the  higher  paid  artisans  and  of  pro- 
fessional workers  and  clerks,  who  are  economieally  members 
of  the  working  classes  just  as  much  as  the  manual-labour 
classes  themselves,  has  been  greatly  increasing.  It  would 
have  been  a  miracle  if,  with  all  the  increase  of  machinery 
and  develojjment  of  artistic  skill  which  has  been  going  on, 
any  other  change  had  taken  place.  A  general  improvement 
of  the  masses,  without  a  relative  mcrease  of  the  numbers 
receiving  high  rates  of  remuneration,  appears  to  be  a  con- 
tradiction in  terms. 

Before  passing  from  these  figures,  it  will  be  interesting  to 
compare,  in  a  more  complete  form  than  was  possible  when 
I  gave  my  former  paper,  the  increase  of  the  income  of  the 
last  fifty  years  which  belongs  to  capital,  and  the  increase 
which  belongs  to  labour.  Using  and  expanding  the  table 
given  in  my  former  address  (see  the  previous  Essay,  -p.  104), 
and  incorporating  some  of  the  above  figures,  I  have  compiled 
the  foUowinfT  Table : — 


For  details  sec  Appendix  G. 


OF   TIIK    WoHKINfi    iLASSliS. 


467 


Tablk  showinc;   thk   I'uoi-ortion  or  the  Inckkask  of  Incomk   in 

THE    LAST    FlKTV    VeABS   BELOXCMNC  TU  CaMTAI,   AND   TO   I.AIlon: 
Kr:si'E(TIVEI.Y. 


(1.)  Ciiiiitiilist  cliisscs  iVoiu  c;n)i-i 
tal  .         .         .         .         .  / 

(2.)  Capitalist     "  working  "    in-^ 
conirin  income-tax  returns 

(8.)  Workinp;  income  of  u]iprr  and  [ 
middles    classes   below   in- 
come-tax limit.         .         .'' 

(-1.)  Manual-labour  class     . 


1843. 


Mlns. 
190 

'54 
171 


J're.seut 
Time. 


:Mlns. 
100 

1.270 


In.  i.,i.>. 


Vinoiint.  I'crccnt, 


Mlns. 
JIG 

166 


12.J 


100 


379    I    200 


These  lij^ures  of  cKurse  luuki!  im  iireteiice  to  cxMetiiess, 
The  Imes  of  division  arc  l»y  im  means  clear,  and  ihcrr  is  an 
es])ecial  dimeulty  in  Die  matter,  wliicli  \  haw  liad  nu  time 
to  investigate,  occasioned  by  the  alteration  ten  years  ago  in 
tlie  minimum  limit  of  the  income  tax.  But  for  our  present 
jturpose  exactness  is  not  reijuired;  tlie  more  the  subject  is 
looked  into  the  more  it  l^ecomes  clear  that  the  greater 'part 
of  the  increased  money  earnings  of  the  community  of  this 
country  in  the  last  fifty  years  has  gone  to  lal)our  and  not  to 
capital.  The  cliicf  effect  of  tlie  improvement  has  I>een  to 
raise  enormously  in  the  scale  of  living  tlic  masses  of  the 
community. 

It  will  be  observed  thai  in  l!iis  labh",  as  I  havr  nfioii 
done  throughout  the  jiaper,  1  havi'  spoken  of  tlie  "  workin'^ 
classes  "  in  the  economic  sense,  as  being  a  nnich  larger  clasi.s 
tlian  the  "working  classes"  as  popularly  understood.  Tt 
is  expedient,  I  believe,  Avith  reference  to  many  Socialist 
doctrines,  to  emphasise  tlic  facts  tliat  the  workin:;  classes 


468         rURTHER  NOTES  ON  THE  PROGRESS 

in  thf  l.irii^er  sense  <Io  include  many  more  people  than  llic 
mapual-labour  classes  ;  that  their  work  is  equally  an  essential 
contriV)ution  to  the  whole  production  of  tlie  community;  and 
that  in  any  case,  the  figures  we  have  been  dealing  with 
being  those  of  income,  we  must  not  commit  the  mistake  of 
supposing  that  there  is  any  one  class  wliicli  in  any  special 
sense  ]iroduces  that  income.  In  tlie  working  income  included 
in  the  income-tax  returns  as  forming  part  of  the  income  of 
tlie  upper  and  lower  middle  classes  not  included  in  these 
returns,  you  liave  such  incomes  as  those  of  artists,  authors, 
actors  and  actresses,  singers,  and  many  more  who  are  as 
]nuch  workers  as  any  member  of  the  artisan  or  labouring 
classes.  Their  incomes  go  to  swell  tlie  large  total  of  over 
1200  millions  with  wliicli  we  have  l)een  dealing.  When  we 
are  speaking  of  the  working  classes  of  the  community,  we 
should  include  every  man  who  works.  In  this  sense  there 
is  certainly  no  doubt  that  it  is  not  the  caj)italist  who  has 
reaped  most  from  the  economic  improvement  of  the  last 
llfty  years.  As  the  result  of  the  excessive  competition  which 
the  multiijlication  of  capital  has  produced,  capitalists  all 
round  Imxa  jJcr  force  to  be  content  with  a  lower  rate  of  profit. 
Hence  while  ca})ital  has  increased,  the  income  I'rom  capital 
has  not  increased  in  proportion.  The  increase  of  earnings 
goes  exclusively,  or  almost  exclusively,  to  tlie  "  working 
classes." 


VI.—SUMMARY  AND  COXCLmiOK 

It  will  be  (Y)nvenient  imw  to  sum  up  the  conclusions  which 
have  been  arrived  at. 

The  contentions  of  my  jiajter  two  years  ago  were  that  the 
working  classes  of  the  United  Kingdom  had  enjoyed  a  great 


OF   THE   WORKING   CXASSES.  469 

iinprovcnieiU  in  llicir  iiKnicy  wii^^'cs  in  llw;  lusL  fifty  yriir>.  ;in 
iinprovcniciit  I'Diiijfhly  cstiiniitt'd  ;il.  .".()  to  loij  per  cent.;  llint 
tlic  hours  oriii])our  li;i<l  Ikmmi  sliuiiciu'd  in  tlic  same  period  L'n 

percent;    (.hat  ahm^wilh  l1iis  iia]»rnvenient  there  had  1 n 

a  Licneral  fall,  or  at  any  rati'  no  increase,  in  llie  prices  of  the 
prinei])al  articles  ol'  ueneral  (Minsuin]iti<>n,  with  the  exccptinn 
of  rent  and  meat,  wlicre  the  increase  still  left  to  the  lalmurei- 
a  large  margin  fur  increased  niiseellanons  expenditure  ;  that 
meat  in  ])articular  was  not  an  article  of  ueiicral  eon^uin]ition 
hy  tlie  masses  of  tlie  community  lifty  years  ago  as  it  lias  since 
become;  that  the  coiKhtion  of  tlie  masses  had  in  faet  im- 
proved vastly,  as  was  s]|o^\ll  hy  the  diminished  rate  of 
mortality,  the  increased  coiisuiii]itioii  ]irr  licml  of  tea,  sn^^ar. 
and  llie  like  articles,  the  extension  of  )io]Hilar  I'diication.  the 
diminution  of  crime  and  paiiperisin,  and  tlic  iiicrea>e  of 
savings  liank  cU'posils,  as  well  as  of  other  forms  of  saving' 
among  the  masses;  and  that,  tinally.  neithei-  the  anioiinl  I'f 
capital  nur  the  return  upon  it,  and  es[»ecially  not  the  return 
upon  capital,  had  increased  so  much  as  the  income  of  tlie 
workers  of  the  country  fr(na  their  work. 

Jn  the  jiresent  paper  these  conclusions  liaxe  heeii  a<lditioii- 
ally  su]iported. 

1.  It  has  liccn  sIioanu,  in  op['o,^ition  to  \.irious  ohjectioii^  to 
the  former  paper,  that  the  estimate  of  5<)  to  1(1(1  ]icr  cent,  as 
the  average  iDiprovcmenI  d'  the  money  \\ages  o['  the  woiiNiiej 
classes  in  fifty  years,  is  not  only  not  excessive  hut  under  the 
mark,  lleasons  have  been  urged  for  attaching  special  im- 
portance, in  comparisons  of  money  wages  fifty  years  ago  ami 
at  the  present  time,  to  the  instances  of  maximum  inerease. 
where  a  given  employment  at  a  given  ]ilace  is  eomjmred  with 
the  same  employment  at  an  earlier  jieriod.  It  has  farther 
been  pointed  out,  on  a  l>road  survey  of  the  facts,  that  tln' 
composition  of  tlie  people  of  the  United  Kinudoni  i'^  entirely 


470  FURTltEll   NOTES   ON    I'HE   tKGGEESS 

elian.nccl  i'ruiii  what  it  was  fifty  years  ago;  that  wlicicas  iil'ty 
years  ago  one-tliird  of  the  working  masses  were  Irish  peasants 
earning  a  douljtl'ul  4s.  a  week  on  the  average,  and  the 
agricnltiiral  popnhition  of  Great  Britain  constituted  another 
third  of  the  total,  this  chiss  likewise  earning  much  smaller 
incomes  tlian  tlie  tliird  class,  consisting  of  the  non-agricultural 
workers  of  (Ireat  Britain,  yet  now  the  Irish  labourers  arc  less 
tlian  one-eighth  of  the  total,  the  British  agricultural  labourers 
are  also  one-eighth  only,  and  tlie  remaining  three-fourths  are 
Jirtisans,  and  other  non-agricultural  workers  in  Crreat  Britain, 
M'ho  constituted  fifty  years  ago  only  al)Out  a  third  of  the 
M'hole  population.  Even  if  the  wages  of  the  different  classes 
bad  not  increased,  tbis  cbange  in  the  composition  of  the  mass 
^^■ould  itself  imply  an  average  improvement.  An  imjirove- 
nient  of  50  per  cent,  in  the  unit  of  each  class  would  impl}' 
of  itself,  allowing  for  the  change  in  the  relative  numbers  of 
tlie  classes,  an  average  improvement  of  nearly  3  00  jier  cent. 

-.  The  i)robability  of  a  great  average  improvement  is 
faither  shown  by  the  magnitude  of  the  improvement  in  the 
case  of  the  units  of  the  worst  paid  labour,  where  there  has 
l)een  a  diminution  in  nundjers.  In  Ireland  the  improvement 
in  the  wages  or  earnings  of  small  farmers  and  labourers  is  at 
least  100  per  cent.,  the  doubtful  average  46-.  of  fifty  years  ago 
having  been  converted  into  a  mucli  less  doubtful  8,s.,  or  its 
eipiivalent,  at  the  present  time.  In  8cotland  and  AVales  the 
average  improvement  in  agricultural  laljour  has  equally  been 
about  100  ]»er  cent.,  from  On.  in  the  former  case  to  l8.s.,  and 
from  7^.  y'xi.  in  the  latter  case  to  l.jx.  In  England  the 
changes  are  not  quite  so  extreme,  bul  from  8s.  to  los.,  and 
from  lO.s'.  to  10s.  are  not  uncommon  figures,  fully  justifying 
Sir  James  Caird's  conclusion,  which  I  quoted  in  my  former 
paper,  as  to  there  having  been  an  improvement  of  GO  per 
cent. 


OF  Tin;  -wonKiNV,  rr,\s.si:s.  471 

o.  The  worst  i»;u(l  laliour  in  (IriMt  Uritwin  of  ;i  imti- 
ngi'icultural  kind  lias  e<[iuilly  uiulurj^oiu'  iiii])i(.v(iu(iit.  In 
tho  Motro]ioli8,  and  the,  lending  manufacturing  towns,  the  rise 
ranges  from  in.y.  to  25.s'.,  or  about  7<»  per  cent.,  but  in  other 
parts  of  the.  eountry,  as  in  Glas<j;ow,  tlierc  are  cases  of  an 
advanee  of  lOO  per  cent.,  the  improvement  in  wages  liinnallv 
appearing  to  he  greater  in  places  like  (llasgow  tlian  in  the 
leading  to^\'ns  of  England. 

4,  There  has  also  been  a  great  increase  in  tbc  iiuiubei'  of 
income-tax  assessments,  implying  an  improvi'nicni  of  Un- 
artisan  and  other  classes  just  l)eluw  the  income-tax  limit. 

5.  There  has  been  a  simultaneous  improvement  in  France, 
Germany,  and  other  countries.  The  improvement  in  ilju 
United  Kingdom  is  not  an  isolated  fact. 

G.  There  is  accordingly  nothing  to  be  astonished  at  in  an 
average  improvement  of  the  money  wages  of  "  working 
classes  "  in  the  last  fifty  years  amounting  to  lno  pei-  cent. 
When  the  facts  are  considered,  such  an  iniiirovcmcnt  i<,  in 
reality,  antecedently  probable. 

7.  The  condition  of  the  masses  fifty  years  at^o  was  in  truth 
deplorable,  as  is  shown  by  numerous  extracts  from  the  writ- 
ings of  Thomas  Carlyle,  Lord  Beaconsfield,  Mrs.  Gaskell.  and 
^Ir.  Thornton,  and  by  references  to  numerous  Blue-books. 
Even  the  manufacturing  operatives  of  Engluiul,  the  most 
advanced  class  of  all,  were  liable  to  frequent  and  great  priva- 
tions, through  the  complete  suspension  of  work,  and  had  ai 
times  to  live  on  very  "  short  commons." 

8.  AVith  regard  to  the  consumption  of  incat  by  the  agri- 
cultural classes  of  Englanil,  as  to  which  the  staifinmis  made 
in  my  former  paper  were  specially  challenged,  farther  inquiry 
has  shown  that  the  gTOund  of  the  cliallenge  was  sinuularlv 
erroneuus.  A  table  in  ]\Ir.  Porter's  *  Progress  of  ijie  Nation.' 
whifh  was  (pioted  by  an  objector  to  juove  that   r>(l  po'  cent. 


472  FURTHER  NOTES  ON  THE  PROGRESS 

of  the  agricultural  classes  of  England  liad  meat  as  a  regular 
portion  of  their  diet  lialf  a  century  ago,  is  found  to  show, 
when  tlie  data  are  referred  to,  tliat  much  fewer  than  50  per 
cent,  liad  "  bacon"  as  an  occasional  portion  of  tlieir  diet ;  and 
that  there  is  liardly  once  mention  of  any  other  meat  as  a 
])ortion  of  the  agricultural  hibourer's  diet  among  tli(;  state- 
nuMits  from  whicli  the  table  is  compiled. 

0.  Finall}''  it  is  shown,  on  a  comparison  of  incomes  in  the 
aggregate,  that  while  the  total  income  of  the  country  fd'ty 
years  ago  was  aljout  500  millions  only,  of  which  two-hfths 
were  derived  from  agriculture,  the  present  income,  on  the 
authority  of  Mr.  Dudley  Baxter  and  Mr.  Leone  Levi,  may  be 
placed  at  aliout  1270  millions,  of  which  only  one-sixtli  is 
from  agriculture.  At  the  same  time  the  agricultural  labourer 
is  better  off,  because,  while  his  numbers  have  diminished,  the 
net  income  from  agriculture,  and  his  share  of  that  income, 
have  both  increased.  Farther,  the  working  masses  of  Great 
Britain  have  more  than  doubled  tlieir  number  in  the  interval, 
sinmltaneously  with  a  vast  diminution  in  Ireland,  whose 
aggregate  hicome  remains  much  the  same,  though  with  a 
diminished  number  to  share  it.  Hence  the  increase  of 
income  in  the  fifty  years  has  l)een  mainly  among  the  higher- 
paid  classes,  and  the  hiud  result  is  tliat  whereas  fitly  years 
ago  the  woiking  masses  of  the  Ihiited  Kingdom,  amounting 
to  9  millions,  earned  in  all  about  171  millions,  or  £19  per 
head,  the  Avorking  masses,  now  amounting  to  ON'er  13  millions, 
earn  about  550  millions,  or  nearly  £12  per  head,  an  increase 
of  much  more  than  100  per  cent. 

10.  Wlieu  the  increase  of  eaiiiings  from  labour  and  capital 
is  compared,  it  is  hjund  that  the  increase  from  capital  is  from 
190  to  400  millions  only,  or  about  100  per  cent. ;  the  increase 
from  tlu!  "  working  "  of  the  upper  and  middle  classes  is  frum 
154  to  r.20  millions,  or  about  100  per  cent. ;  and  the  increase 


OF  Tin:  woitiuNii  CLASSICS.  47;J 

nf  tlio  incomo  of  the  iiianuiil  lalioiirclii.ssL'S  is  from  171  to  .'."0 
Diillioiis,  or  ovor  2tM)  ]k'1'  cciil.  In  amount  tho  increase  tine 
to  r;i])ii;il  is  ahoiit  1' 1 H  mi | Iji nis  ;  to  laliour  of  tlic  upper  and 
miilillc  classes,  IdO  millions;  ;iii,l  to  lalionr  of  tlic  manual- 
labour  classes,  ?)7^  millions,  a  total  inciease  of  7."i"t  millions. 

The  Ljcneral  conclusion  I'rom  all  the  I'acts  is,  that  what  has 
]ia]t])(>nc(l  to  the  workinii;' classes  in  the  last  fifty  years  is  not 
so  much  wliat  may  properly  he  callcil  an  imjiroxcmmt,  a-^  a 
revolution  of  the  most  remarkahle  description.  The  new 
possibilitii's  im])lic(l  in  chaiiL^es  which  in  fifty  years  have 
substituted  for  millions  of  pec>plc  in  ilie  Ignited  Kingdom 
who  were  constantly  on  the  brink  of  starvation,  and  who 
suffered  untohl  privations,  new  milli(jns  of  artisans  and  fairly 
well-])aid  laliourers,  out^ht  indeed  to  excite  the  hopes  of 
]ihilaiithro]iists  and  ])ul)lic  men.  From  bcini^  a  dependent 
class  without  future  and  lio])e,  the  masses  of  working'  men 
have  ill  fact  .i^ot  into  a  position  from  which  they  may 
.  effectually  advance  to  almost  any  decree  of  civilisation. 
Every  a«"ency,  political  and  other,  shouhl  be  maile  use  of  by 
themselves  and  others  to  ]>idmoie  and  cMeiid  the  imiM'ove- 
ment,  Ihit  the  working  men  have  the  uame  in  their  own 
liaiids.  Education  and  thrift,  which  they  can  achieve  Ibr 
themselves,  will,  if  necessary,  do  all  that  remains  to  be  done. 
AVhatever  else  can  be  done,  will  be  done  all  the  more  easily 
if  education  and  thrift  are  ])racti«ed.  1  am  not  speakint:  now 
theoretically;  I  know  from  exju'rieiice,  and  from  inlimale 
acc[uaiiitance  with  working  nnn  themselves,  usiiiii;  the  words 
"  working  men  "  this  time  in  a  po]»ular  .sen.so,  what  can  he 
done  on  very  small  means,  k  will  be  a  shame  to  Eiij^lisii 
working  men  if  they  cannot  with  comparatively  amjile  means 
raise  themselves  to  the  stamlard  of  education  which  Scotch 
peasants  have  long  since  been  able  to  reach  with  what,  until 
recent  years,  were  vt-rv  narrow  mean-^. 
II.  2  I 


474  raoGRESs  of  the  working  classes. 

Ill  conclusion,  let  nie  point  out  that  in  the  near  future 
there  is  a  very  serious  difficulty  impending ;  the  difficulty  in 
fact  is  already  upon  us.  Since  I  wrote  two  years  ago,  prices 
have  farther  declined,  which  would  seem  to  give  working 
men  even  a  greater  advantage  than  they  had  then.  But  this 
decline  is  due  to  causes,  as  I  believe,  which  necessarily 
involve  a  fall  in  money  wages  and  profits.  Wages  and 
profits  must  to  some  extent  be  adjusted  to  the  changed  prices. 
Hence  the  present  time  I  have  spoken  of  now  has  been 
rather  that  of  two  years  ago,  when  my  former  paper  was 
written,  than  the  actual  present.  If  I  were  to  take  account 
of  the  most  recent  changes  in  prices,  I  should  also  have  to 
take  account  of  the  most  recent  changes  in  wages,  which  are 
all  in  a  state  of  transition.  What  I  have  to  suggest  to  all 
concerned  is  that  the  fall  of  prices,  considering  the  length  to 
which  it  has  gone,  is  a  phenomenon  which  working  men 
should  carefully  study  in  their  own  interest,  and  that  they 
should  be  prepared  to  some  extent  for  a  reduction  in  money 
wages.  What  concerns  them  is  not  "money"  wages,  but 
"  real "  wa^es.  It  is  quite  possible  that  in  a  period  when 
money  wages  are  falling,  along  with  all  other  money  values, 
their  real  condition  may  improve,  because  the  fall  in  money 
wages  is  less  than  the  fall  in  the  money  prices  of  the 
principal  connnodities  which  they  consume.  The  question 
is  not  one  which  working  men  or  any  other  class  can  avoid. 


THE   END. 


LOXDOx:  PKixTEn  r.Y  william  clowes  and  sons,  limited, 

.'^TAM^■lJKU  STliKET  ASD  CUAUISCi   CKOSJS. 


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l^h   Essays  in 
G36e  finance 
188^ 


HG 
151 
G36e 
1886 


000  568  388 


